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100th Congress — 1st Session • January 6-December 22, 1987

Senate Report

No. 216

IRAN-CONTRA INVESTIGATION

APPENDIX B, VOLUME 25
DEPOSITIONS

United States Congressional Serial Set

Serial Number 13766

United States Government Printing Office
Washington : 1989

Union Calendar No. 277
100th Congress, 1st Session
S. Rept. No. 100-216 H. Rept. No. 100-433

Report of the Congressional Committees Investigating the

Iran-Contra Affair

Appendix B: Volume 25
Depositions

Daniel K. Inouye, Chairman,
Senate Select Committee

Lee H. Hamilton, Chairman,
House Select Committee

U.S. Senate Select Committee U.S. House of Representatives

On Secret Military Assistance to Iran Select Committee to Investigate

And the Nicaraguan Opposition Covert Arms Transactions with Iran

November 13, 1987. - Committed to the Committee of the Whole House

on the State of the Union and ordered to be printed.

November 17, 1987.— Ordered to be printed.

Washington : 1988

Bnited States ^tnate

SELECT COMMITTEE ON SECRET MILITARY

ASSISTANCE TO IRAN AND THE NICARAGUAN OPPOSITION

WASHINGTON. DC 20510-6480

March 1, 1988

Honorable John C. Stennis
President pro tempore
United States Senate
Washington, D.C.

Dear Mr. President:

We have the pleasure to transmit herewith, pursuant to
Senate Resolution 23, Appendix B to the final Report of the
Senate Select Committee on Secret Military Assistance to Iran
and the Nicaraguan Opposition. We will submit such other volumes
of Appendices to the Report as are authorized and as they become
available.

Sincerely,

Warren B. Rudman V^^
Vice Chairman

III

U.S. HOUSE OF REPRESENTATIVES

SELECT COMMITTEE TO INVESTIGATE

COVERT ARMS TRANSACTIONS WITH IRAN

UNITED STATES CAPITOL

WASHINGTON. DC 206 IB

(202) 22S-7B02

March 1, 1988

The Honorable Jim Wright
Speaker of the House
U. S. Capitol
Washington, D. C. 20515

Dear Mr . Speaker :

Pursuant to the provisions of House Resolutions 12 and
330 and House Concurrent Resolution 195, 100th Congress, 1st
Session, I transmit herewith Appendix B to the Report of the
Congressional Committees Investigating the Iran-Contra Affair,
House Report No. 100-433, 100th Congress, 1st Session.

Appendix B consists of the depositions taken by the
Select Committees during the investigation. The contents of
Appendix B have been declassified fq^-Yelease to the public.

Lee H. Hamilton
Chairman

United States Senate

Select Committee on Secret Military Assistance
To Iran and the Nicaraguan Opposition

Daniel K. Inouye, Hawaii, Chairman
Warren Rudman, New Hampshire, Vice Chairman

George J. Mitchell, Maine

Sam Nunn, Georgia
Paul S. Sarbanes, Maryland
Howell T. Heflin, Alabama
David L. Boren, Oklahoma

James A. McClure, Idaho

Orrin G. Hatch, Utah

William S. Cohen, Maine

Paul S. Trible, Jr., Virginia

Arthur L. Liman
Chief Counsel

Mark A. Belnick Paul Barbadoro

Executive Assistant Deputy Chief Counsel

To the Chief Counsel

Mary Jane Checchi
Executive Director

Lance I. Morgan
Press Officer

United States House of Representatives

Select Committee to Investigate Covert Arms
Transactions with Iran

Lee H. Hamilton, Indiana, Chairman
Dante B. Fascell, Florida, Vice Chairman

Thomas S. Foley, Washington

Peter W. Rodino, Jr., New Jersey

Jack Brooks, Texas

Louis Stokes, Ohio

Les Aspin, Wisconsin

Edward P. Boland, Massachusetts

Ed Jenkins, Georgia

Dick Cheney, Wyoming, Ranking Republican

Wm. S. Broomfield, Michigan

Henry J. Hyde, Illinois

Jim Courter, New Jersey

Bill McCollum, Florida

Michael DeWine, Ohio

John W. Nields, Jr.
Chief Counsel

W. Neil Eggleston
Deputy Chief Counsel

Kevin C. Miller
Staff Director

Thomas R. Smeeton
Minority Staff Director

George W. Van Cleve
Chief Minority Counsel

Richard J. Leon
Deputy Chief Minority Counsel

VII

United States Senate

Select Committee on Secret Military Assistance to
Iran and the Nicaraguan Opposition

Arthur L. Liman
Chief Counsel
Mark A. Belnick Paul Barbadoro

Executive Assistant Deputy Chief Counsel

to the Chief Counsel

Mary Jane Checchi
Executive Director

Lance I. Morgan
Press Officer

Associate Counsels

C. H. Albright, Jr.
Daniel Finn
C. H. Holmes
James E. Kaplan
Charles M. Ken-
Joel P. Lisker

W. T. McGough, Jr.
Richard D. Parry
John D. Saxon
Terry A. Smiljanich
Timothy C. Woodcock

Committee Staff

Assistant Counsels

Legal Counsel
Intelligence/Foreign

Policy Analysts
Investigators

Press Assistant
General Accounting
Office Detailees

Security Officer
Security Assistants

Chief Clerk
Deputy Chief Clerk

Steven D. Arkin*
Isabel K. McGinty
John R. Monsky
Victoria F. Nourse
Philip Bobbitt
Rand H. Fishbein
Thomas Polgar
Lawrence R.

Embrey, Sr.
David E. Faulkner
Henry J. Flynn
Samuel Hirsch
John J. Cronin
Olga E. Johnson
John C. Martin
Melinda Suddes*
Robert Wagner
Louis H. Zanardi
Benjamin C.

Marshall
Georgiana

Badovinac
David Carty
Kim Lasater
Scott R. Thompson
Judith M. Keating*
Scott R. Ferguson

Staff Assistants

Administrative Staff

Secretaries

Receptionist
Computer Center
Detailee

John K. Appleby
Ruth Balin
Robert E. Esler
Ken Foster*
Martin H. Garvey
Rachel D. Kaganoff*
Craig L. Keller
Hawley K.

Manwarring
Stephen G. Miller
Jennie L. Pickford*
Michael A. Raynor
Joseph D.

Smallwood*
Kristin K. Trenholm
Thomas E. Tremble
Bruce Vaughn
Laura J. Ison
Hilary Phillips
Winifred A. Williams*
Nancy S. Durflinger
Shari D. Jenifer
Kathryn A. Momot
Cindy Pearson
Debra S. Sheffield*
Ramona H. Green
Preston Sweet

VIII

Committee Members' Designated Liaison

Senator Inouye
Senator Rudman

Senator Mitchell

Senator Nunn

Senator Sarbanes
Senator Heflin

Peter Simons
William V. Cowan
Thomas C. Polgar
Richard H.
Arenberg
Eleanore Hill
Jeffrey H. Smith
Frederick Millhiser
Thomas J. Young

Senator Boren

Senator McClure
Senator Hatch

Senator Cohen

Senator Trible

Sven Holmes
Blythe Thomas
Jack Gerard
Dee V. Benson
James G. Phillips
James Dykstra
L. Britt Snider
Richard Cullen

Part Time*

Assistant Counsel
Hearings Coordinator
Staff Assistants

Interns

Peter V. Letsou
Joan M. Ansheles
Edward P.

Flaherty, Jr.
Barbara H. Hummell
David G. Wiencek
Nona Balaban
Edward E.

Eldridge, III
Elizabeth J. Glennie
Stephen A. Higginson
Laura T. Kunian
Julia F. Kogan
Catherine L. Udell

Document Analyst

Historian

Volunteers

Lyndal L. Shaneyfelt
Edward L. Keenan
Lewis Liman
Catherine Roe
Susan Walsh

♦The staff member was not with the Select Committee when the Report was filed but had, during
the life of the Committee, provided services.

United States House of Representatives

Select Committee to Investigate
Covert Arms Transactions with Iran

Majority Staff

Special Deputy

Chief Counsel
Staff Counsels

Press Liaison
Chief Clerk
Assistant Clerk
Research Director
Research Assistants

John W. Nields, Jr.
Chief Counsel

W. Neil Eggleston
Deputy Chief Counsel

Kevin C. Miller
Staff Director

Charles Tiefer

Kenneth M. Ballen
Patrick J. Carome
V. Thomas

Fryman, Jr.
Pamela J.

Naughton
Joseph P. Saba
Robert J. Havel
Ellen P. Rayner
Debra M. Cabral
Louis Fisher
Christine C.

Birmann
Julius M.

Genachowski
Ruth D. Harvey
James E. Rosenthal

Systems

Administrator
Systems

Programmer/

Analysts
Executive Assistant
Staff Assistants

Catherine L.

Zimmer
Charles G. Ratcliff
Stephen M.

Rosenthal
Elizabeth S. Wright
Bonnie J. Brown
Christina Kalbouss
Sandra L. Koehler
Jan L. Suter
Katherine E. Urban
Kristine Willie
Mary K. Yount

Minority Staff

Associate Minority

Counsel
Assistant Minority'

Counsel
Minority Research

Director

Thomas R. Smeeton
Minority Staff Director

George W. Van Cleve
Chief Minority Counsel

Richard J. Leon
Deputy Chief Minority Counsel

Robert W.
Genzman
Kenneth R. Buck

Bruce E. Fein

Minority Staff
Editor/Writer

Minority Executive
Assistant

Minority Staff
Assistant

Michael J. Malbin

Molly W. Tully

Margaret A.
Dillenburg

Committee Staff

Investigators

Director of Security

Robert A.

Bermingham
James J. Black
Thomas N.

Ciehanski
William A. Davis,

III
Clark B. Hall
Allan E. Hobron
Roger L. Kreuzer
Donald Remstein
Jack W. Taylor
Timothy E. Traylor
Bobby E. Pope

Security Officers

Editor

Deputy Editor
Associate Editor
Production Editor
Hearing Editors

Printing Clerk

Rafael Luna, Jr.
Theresa M. Martin
Milagros Martinez
Clayton C. Miller
Angel R. Torres
Joseph Foote
Lisa L. Berger
Nina Gray bill
Mary J. Scroggins
David L. White
Stephen G. Regan
G. R. Beckett

Associate Staff

Representative
Hamilton

Representative
Fascell

Representative

Foley
Representative

Rodino

Representative

Brooks
Representative

Stokes
Representative

Aspin

Michael H.

Van Dusen
Christopher Kojm
R. Spencer Oliver
Bert D. Hammond
Victor Zangia
Heather S. Foley
Werner W. Brandt
M. Elaine Mielke
James J.

Schweitzer
William M. Jones

Michael J. O'Neil
Richard M. Giza
Richard E. Clark
Warren L. Nelson

Representative

Boland
Representative

Jenkins
Representative

Broomfield
Representative

Hyde
Representative

Courter
Representative

McCollum
Representative

DeWine
General Counsel to

the Clerk

Michael W. Sheehy

Robert H. Brink

Steven K. Berry
David S. Addington
Diane S. Doman

Dennis E. Teti

Tina L. Westby

Nicholas P. Wise

Steven R. Ross

Contents

Volume 25

Preface XXI

Shackley, Theodore G 1

Sigur, Gaston J 477

Simpson, Major C 55 1

Sinclair, Thomas C 857

Singlaub, John K 909

XIII

Depositions

Volume 1

Airline Proprietary Project Officer.
Alvarez, Francisco J.
Allen, Charles.
Arcos, Cresencio.

Volume 2

Volume 3

Armitage, Richard.
Artiano, Martin L.
Associate DDO (CIA).
Baker, James A., III.
Barbules, Lt. Gen. Peter.
Bamett, Ana.
Bartlett, Linda June.
Bastian, James H.
Brady, Nicholas F.
Brown, Arthur E., Jr.

Byrne, Phyllis M.
Calero, Adolfo.
Castillo, Tomas ("W").
Cave, George W.
C/CATF.

Volume 4

Channell, Carl R.

Chapman, John R. (With Billy Ray Reyer).

Chatham, Benjamin P.

CIA Air Branch Chief.

CIA Air Branch Deputy Chief.

CIA Air Branch Subordinate.

CIA Chief.

CIA Conmiunicator.

CIA Identity "A".

Volume 5

CIA Officer.

Clagett, C. Thomas, Jr.

Clark, Alfred (With Gregory Zink).

Clarke, George.

Clarridge, Dewey R.

Cline, Ray S.

C/NE.

Cohen, Harold G.

Volume 6

Collier, George E.

Cole, Gary.

Communications Officer Headquarters, CIA.

Conrad, Daniel L.

Volume 7

Cooper, Charles J.
Coors, Joseph.
Corbin, Joan.
Corr, Edwin G.
Coward, John C.
Coy, Craig P.
Crawford, Iain T.R.

Crawford, Susan.
Crowe, Adm. William J.
Currier, Kevin W.
DCM, Country 15.
DEA Agent 1.
DEA Agent 2.
DEA Agent 3.
deGraffenreid, Kenneth,
de la Torre, Hugo.
Deputy Chief "DC".

Duemling, Robert W.
DIA Major.
Dietel, J. Edwin.
Dowling, Father Thomas.
Dutton, Robert C.
Earl, Robert.

Volume 8

Volume 9

XVI

Farber, Jacob.
Feldman, Jeffrey.
Fischer, David C.
Floor, Emanuel A.
Former CIA Officer.
Fraser, Donald.
Fraser, Edie.
Fuller, Craig L.

Volume 10

Volume 11

Furmark, Roy.

Gadd, Richard.

Gaffhey, Henry.

Gaffhey, Henry (With Glenn A.

Galvin, Gen. John R.

Gantt, Florence.

Garwood, Ellen Clayton.

Gast, Lt. Gen. Philip C.

Gates, Robert M.

Glanz, Anne.

Rudd).

Volume 12

George, Clair.
Godard, Ronald D.
Godson, Roy S.
Golden, William.
Gomez, Francis D.
Goodman, Adam.
Gorman, Paul F.
Graham, Daniel O.
Gregg, Donald P.
Gregorie, Richard D.
Guillen, Adriana.

Hakim, Albert.

Hall, Wilma.
Hasenfiis, Eugene.
Hirtle, Jonathan J.
Hooper, Bruce.

Volume 13

Volume 14

XVII

Hunt, Nelson Bunker.
Ikle, Fred C.
Jensen, D. Lowell.
Juchniewicz, Edward S.
Kagan, Robert W.
Keel, Alton G.
Kellner, Leon B.
Kelly, John H.
Kiszynski, George.

Koch, Noel C.
Kuykendall, Dan H.
Langton, William G.
Lawn, John C.
Leachman, Chris J., Jr.
Ledeen, Michael A.

Leiwant, David O.
Lilac, Robert H.
Lincoln, Col. James B.
Littledale, Krishna S.
McDonald, John William.
McFarlane, Robert C.
McKay, Lt. Col. John C.
McLaughlin, Jane E.

McMahon, John N.
McMahon, Stephen.
McNeil, Frank.
Makowka, Bernard.
Marostica, Don.
Marsh, John.
Mason, Robert H.

Meese, Edwin IIL
Melton, Richard H.
Merchant, Brian T.
Meo, Philip H.
Miller, Arthur J.
Miller, Henry S.
Miller, Johnathan.

Volume 15

Volume 16

Volume 17

Volume 18

XVIII

Miller, Richard R.

Motley, Langhome A.
Mulligan, David R
Nagy, Alex G.
Napier, Shirley A.
Newington, Barbara.
North, Oliver L.
O'Boyle, William B.
Osborne, Duncan.
Owen, Robert W.
Pena, Richard.
Pickering, Thomas.
Poindexter, John M.

Posey, Thomas V.
Powell, Gen. Colin L.
Price, Charles H., II.
Proprietary Manager.
Proprietary Pilot.
Radzimski, James R.
Ramsey, John W.
Ransom, David M.

Volume 19

Volume 20

Volume 21

Volume 22

Raymond, Walter, Jr.

Regan, Donald T.

Reich, Otto J.

Revell, Oliver B.

Reyer, Billy Ray (See John Chapman).

Reynolds, William B.

Volume 23

Richard, Mark M.
Richardson, John, Jr.
Robelo, Alfonso.
Robinette, Glenn A.
Rodriguez, Felix I.
Roseman, David.

XIX

Rosenblatt, William.

Royer, Larry.

Rudd, Glenn A.

Rudd, Glenn A. (See Henry Gaffney).

Rugg, John J.
Russo, Vincent M.
Sanchez, Nestor.
Scharf, Lawrence.
Schweitzer, Robert L.
Sciaroni, Bretton G.
Secord, Richard V.

Shackley, Theodore G.
Sigur, Gaston J.
Simpson, Major C.
Sinclair, Thomas C.
Singlaub, John K.

Slease, Clyde H., IIL
Smith, Clifton.
Sofaer, Abraham D.
Steele, Col. James J.
Taft, William H., IV.
Tashiro, Jack T.
Teicher, Howard.
Thompson, Paul.
Tillman, Jacqueline.

Volume 24

Volume 25

Volume 26

Volume 27

Thurman, Gen. Maxwell.

Trott, Stephen S.

Tull, James L.

Vessey, John.

Walker, William G.

Watson, Samuel J., IIL

Weinberger, Caspar.

Weld, William.

Wickham, John.

Zink, Gregory (See Alfred Clark).

Preface

The House Select Committee to Investigate Covert Arms Transactions with Iran
and the Senate Select Committee on Secret Military Assistance to Iran and the
Nicaraguan Opposition, under authority contained in the resolutions establishing
them (H. Res. 12 and S. Res. 23, respectively), deposed approximately 290
individuals over the course of their 10-month joint investigation.

The use of depositions enabled the Select Committees to take sworn responses
to specific interrogatories, and thereby to obtain information under oath for the
written record and develop lines of inquiry for the public hearings.

Select Committees Members and staff counsel, including House minority
counsel, determined who would be deposed, then sought subpoenas from the
Chairmen of the Select Committees, when appropriate, to compel the individuals
to appear in nonpublic sessions for questioning under oath. Many deponents
received separate subpoenas ordering them to produce certain written documents.

Members and staff traveled throughout the United States and abroad to meet
with deponents. All depositions were stenographically reported or tape-recorded
and later transcribed and duly authenticated. Deponents had the right to review
their statements after transcription and to suggest factual and technical correc-
tions to the Select Committees.

At the depositions, deponents could assert their fifth amendment privilege
to avoid self-incrimination by refusing to answer specific questions. They were
also entitled to legal representation. Most Federal Government deponents were
represented by lawyers from their agency; the majority of private individuals
retained their own counsel.

The Select Committees, after obtaining the requisite court orders, granted
limited or "use" immunity to about 20 deponents. Such immunity means that,
while a deposed individual could no longer invoke the fifth amendment to avoid
answering a question, his or her compelled responses— or leads or collateral
evidence based on those responses— could not be used in any subsequent criminal
prosecution of that individual, except a prosecution for perjury, giving a false
statement, or otherwise failing to comply with the court order.

An executive branch Declassification Committee, located in the White House,
assisted the Committee by reviewing each page of deposition transcript and some
exhibits and identifying classified matter relating to national security. Some
depositions were not reviewed or could not be declassified for security reasons.

In addition, members of the House Select Committee staff corrected obvious
typographical errors by hand and deleted personal and proprietary information
not considered germane to the investigation.

In these Depositions volumes, some of the deposition transcripts are follow-
ed by exhibits. The exhibits— documentary evidence— were developed by Select
Committees' staff in the course of the Select Committees' investigation or were
provided by the deponent in response to a subpoena. In some cases, where the
number of exhibits was very large, the House Select Committee staff chose for
inclusion in the Depositions volumes selected documents. All of the original

XXI

exhibits are stored with the rest of the Select Committees' documents with the
National Archives and Records Administration and are available for public in-
spection subject to the respective rules of the House and Senate.

The 27 volumes of the Depositions appendix, totalling more than 30,000 pages,
consist of photocopies of declassified, hand-corrected typewritten transcripts
and declassified exhibits. Deponents appear in alphabetical order.

XXII

-'\

Publications of the Senate and House
Select Committees

Report of the Congressional Committees Investigating the Iran-Contra Affair,
1 volume, 1987.

Appendix A: Source Documents, 2 volumes, 1988.
Appendix B: Depositions, 27 volumes, 1988.
Appendix C: Chronology of Events, 1 volume, 1988.
Appendix D: Testimonial Chronology, 3 volumes, 1988.

All publications of the Select Committees are available from the U.S.
Government Printing Office.

XXIII

TRANSCRIPT
OF PROCEEDINGS

UNITED STATES SENATE J\^)l^^^^^^^l^1

SELECT COMMITTEE ON

SECRET MILITARY ASSISTANCE TO

IRAN AND THE NICARAGUAN OPPOSITION

DEPOSITION OF THEODORE G. SHACKLEY

Partially DeclassifieO/Rei.ased on 2^*^ 88
onocr provisions of E 0 !23si
" Jonnsorugaticnal Saciiriiy Council

V/^""^

Washington, D.C.
Tuesday, September 15, 1987

UNClASSinED

ACE-FEDER.AL REPORTERS, I.\'C.

Steiwtype Reporters

444 North Capitoi Street

Washington, D.C. 20001

(202) 347-3700
Nationwide Coverage

800-336-6646

82-736 0-88-2

UNHASI^FIED

UNITED STATES SENATE

SELECT COMMITTEE ON

SECRET MILITARY ASSISTANCE TO

IRAN AND THE NICARAGUAN OPPOSITION

DEPOSITION OF THEODORE G. SHACKLEY

Washington, D.C.

Tuesday,

September 15, 1987

Deposition of THEODORE G. SHACKLEY, called for

examination at the offices of the Senate Select Committee,

Suite 901, the Hart Senate Office Building, at 10:10 a.m.

before DAVID L. HOFFMAN, a Notary Public within and for the

District of Columbia, when were present on behalf of the

respective parties:

CAMERON HOLMES, Esq.
Associate Counsel
TIMOTHY WOODCOCK, Esq.
United States Senate

Select Committee on Secret

Military Assistance to Iran

and the Nicaraguan Opposition

Partially Declassified/Released on "?'sJ-/^<
unoer provisions of E.O 12356
by K Johnson. National Secuniy Council

E-fED«AL IIEM)*TC«S. INC

\Mmssim

mmm

JOSEPH P. SABA , Esq.
Associate Majority Counsel
ROBERT W. GENZMAN, Esq
Associate Minority Counsel

United States House of

Representatives Select

Ccnmittee to Investigate

Covert Arms Transactions with Iran

JACK MC KAY, Esq.

Shaw, Pittman, Potts & Trowbridge
2300 N Street, N.W. ,
Washington, D.C.

On behalf of the Deponent

'EMIAl •{POUTEDS. INC

iwcfei^sfFe

mwmm

CONTENTS

WITNESS

EXAMINATION

Theodore

G. Shackley

by Mr.

Holmes

4, 171

by Mr.

Woodcock

152

by Mr.

Saba

EXHIBITS

202

SHACKLEY

DEPOSITION EXHIBITS

IDENTIFIED

1 through 5

f> ' v-

CC-flOOUl RCPOITEIIS. INC.

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m^mm

LB.0£1.1.2.INGS

(Shackley Deposition
Exhibits 1-5 identified.)
Whereupon,

THEODORE G. SHACKLEY
was called as a witness and, having been first duly sworn
was examined and testified as follows:
EXAMINATION
BY MR. HOLMES:
Q Would you please state your name for the record.
A Theodore Shackley.

Q I understand you have a statement you would like
to make .

A I would like to make a couple of points, as we
start today's session.

The first point that I would like to make is
that I have furnished no advice, funds or equipment to the
contras, and I have not sold them anything, and I am
convinced the committee knows that to be a fact, based on
your questioning of other witnesses.

Secondly, on the topic of Iran, I have not been
involved with the National Security Council or any other

FCDCIU DtrOITdlS INC

vHrnrnm

agency of the U.S. Government, in order to arrange direct
or indirect sales, -shipment or provision of arms to Iran.

In my view, the committee also knows that to be
fact, based on the investigations conducted to date.

Thirdly, as you have undoubtedly read from my
statements in the "Washington Post" and other places, I
did have a meeting in November 1984 in Hamburg, Germany,
with a Mr. Ghorbanifar. That meeting was attended by two
other individuals. Emerging from that was a reference
by Mr. Ghorbanifar, who was not known as an arms dealer
at that time, but he had information on Americans in
Lebanon. I took that information pertaining to the
Americans in Lebanon, wrote a report, turned it into the
State Department, to Ambassador Vernon Walters. I turned
it into the State Depeurtment, because that is the agency
of the U.S. Government that is responsible for Americans
abroad who are in trouble. I subsequently heard from
the Department through Mr. Montgomery, the Chief of the
State INR, that they weren't interested in the data that
I had furnished. That was in December 1984. I took no
further action.

In May of 1985, I was asked by Mr. Ledeen,

e-fCKML DCraiTEII]. INC

mmmii

ONWSIFIED

who then was a consultant to the National Security Council,
if I had any ideas on what could be done for the hostages in
Lebanon. I told him I had none.

I did tell him that I had previously written a
paper which I turned in to the State Department. He asked
me if he could see a copy of that paper, I would give him an
update on whether that channel was still viable.

I did both of those things. I turned them over
to Mr. Ledeen, and I never heard anything further on that
matter, until such time as the press started questioning me
about my contacts with Mr. Ghorbanifar.

Based on this sequence of events, my testimony
to the Tower Commission and my discussions with Mr. Holmes
and Mr. Polgar in February and March of 1987, I am perplexed
as to why you have burdened me at this late date with a
series of subpoenas so onerous in scope, they required me
to spend over 215 hours of file searches and to make an
appearance at today's session.

Put most simply, the questions, from my point of
view, are: Why are you doing this? And what do you want?

These are not rhetorical questions born out of
frustration and anger. The issue is one of fairness.

UNClASSinED

UimSSfflED

.(-fCKIAl. •CraHTEIIS. INC

In short, why is my hisiness being put in
jeopardy, and why am I being harassed for having, in my view,
quite properly, reported to the State Department, information
obtained by chance on American hostages in Lebanon. And I'm
concerned, because, as you know, I'm also involved in a
lawsuit in Florida which has been brought against me for
what I think are vicious political reasons, and I'm trying
to understand what this assault is on me, for what reason.

And Mr. Holmes, I would be specifically interested -
in hearing your response to those questions, so I understand
why you called me down here. '
Thank you.

Q Mr. Shackley, unfortxinately , you have asked a
question that is not appropriate for this forum for me to
respond to.

I can tell you that the committee has legitimate
interests in the facts that you have in your mind and in your
files, and we intend to get those facts in a way that will
protect you within the rules of the coi^ttee from unauthorized
or inappropriate disclosure of that information in doing so.

A What does that mean? What are you saying, that you
are not going to answer my question?

wm^

WtASSIflED

Q This is your deposition, Mr. Shackley; it's not
my deposition. You're here to answer questions.

A Why did you ask me to come down?

Q The committee has information that you do have
firsthand knowledge of a number of areas and events that
do directly relate to this investigation. It is simply a
misconception, if I understand your statement correctly, that
a person who has not sold arms to Iran or supplied arms to the
contras doesn't have relevant information. As you may know
from following the hearings, most of the witnesses would fall ■
into neither of those categories. You are another witness.
Whether you fall into either of those categories or not,
simply doesn't mean that you don't have important information
for us.

Your concerns about the Florida lawsuit are
recognized, as our any witnesses' concerns about unauthorized
disclosure of information. I've discussed those things with
your attorney. I notice that you'd stcunped everything that
you've given us "Committee Sensitive," I presume, pursuant
to those discussions. I can assure you that the rules of our
committee, which we abide by religiously .protect you from
unauthorized disclosures.

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If you have additional concerns, for exeunple, in
the area of the Fifth Amendment, I might mention at this point
that it's not the intention of this committee to replace your
Fifth Amendment privilege with any order of immunity for
your testimony. I assume that your attorney will be vigilant
in reminding you of those rights, if any such situation would
come up, but you do not have a Fifth Amendment privilege to
fail to disclose information, simply because it may lead to
your financial liability in a lawsuit, which I express no
opinion on one way or the other. You bring me the concern
of a lawsuit, and that's my response.

MR. MC KAY: We haven't raised any Fifth Amendment
privilege questions.

MR. HOLMES: I understand. I am just seeking to
catalog all the reasons why he might not want to answer
questions. That doesn't appear to be one of them. You have
never asserted the Fifth Amendment befcre.

THE WITNESS: No, I have not.

BY MR. HOLMES:
Q So what we are here to do today is to do what we
had intended to do early in September, and that is to determine
the completeness of the response to the various subpoenas that

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have been served on you in your personal capacity and also as
representative of various corporations.

After we have done that and, obviously, since you
have produced two boxes of records last yesterday afternoon,
not leaving any time to examine them prior to your deposition
this morning, catalog them and examine them and then determine
whether or not we need to continue the deposition either this
week- or to postpone it until perhaps early next week, in order
to question you on the documents themselves, if that is
necessary.

I would like to know from you and your attorney
what your schedules are in that regard, so we can aim at one
or the other alternatives.

A Well, toward the latter part of this week, I have
some appointments that I have to keep, so I'm basically not
available on Friday of this week.

MR. MC KAY: I'm in depositions in New York and
Mobile, Wednesday, Thursday and Friday. I'm here all next
week.

MR. HOLMES: So next Monday would be the best day
to resume.

MR. MC KAY: That's the best day for me, yes.

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MR. HOLMES: Let's aim at that.

BY MR. HOLMES:
Q I'd like to have you glance at these Exhibits 1
through 4 .

(Documents handed to witness.)

MR. HOLMES: They are subpoenas. For the record,
I will read off what the subpoena is, so we can associate a
number with a name.

Exhibit No. 1 is to Theodore Shackley.

Exhibit No. 2 is to API Distributors.

Exhibit No. 3 is to System Services International.

And Exhibit No. 4 is to TGS International, Ltd.
Although I note it's got a typo.

I assume that by producing TGS International
dociiinents, you were, in good faith, attempting to ignore that
typo.

(Document handed to witness.)

THE WITNESS: There were five.

MR. MC KAY: There were five subpoenas. RAI,
you don't have, which we did respond to.

THE WITNESS: The gentlemem who came around and
gave me subpoenas, gave me five.

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BY MR. HOLMES:
Q It is substantially identical to the others,
except that it says RAI ; correct?

I think in some of the paragraphs , they were
worded differently, but the substance of the materials, from
looking at all these and trying to respond to it, they
basically cover the same data.

Q The only difference is, the personal subpoena is
different than the corporate subpoenas; correct?

MR. MC KAY: There is one difference, and I can't
tell you which one. One of the subpoenas has different
Paragraph 2. It's inconsequential, but one of them does not
have the paragraph 2 that says "With regard to any activity
undertaken personally or a consultant on materials required
in No . 1 above . "

That's missing.

MR. HOLMES: Did that cause any difference in your
compliance?

MR. MC KAY: No.

THE WITNESS: If you take these five documents
that were delivered, we have made a good faith search of
my files relative to the totality of the information that

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seems to be conveyed, although the paragraphs are different,
ij as Mr^ McKay has pointed out in one or two of these.
BY MR. HOLMES:
Q Okay. With regard to each corporation, I would
like to ask you what your official capacity is in that
corporation and what has led to your designation by the
corporation as the corporate representative for production
of documents .

Start with API.

MR. MC KAY: Let me just state for the record
which corporations he is designated for.

Those afe TGS International and RAI.
We are not making any designation with respect to
API or with respect to System Services International.
BY MR. HOLMES:
Q All right. Let's just start with API then. Since
you are not the designee for API , could you explain to me
what your role in API is?

A I don't have any role in API. You selected these.
You sent them to me. I don't know why you sent then to me.
Q That's what I'm trying to discover.
What do you know of API?

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A When I retired in August of 1979, I worked for
API Distributors.

Q Who were the officers of the company at that time?

A As far as I know, Mr. Thomas Clines — I don't
really remember. I haven't done any work with them since,
basically, 1980.

Q When did you retire, what date?

A I don't remember the exact date that I retired.
It was the last day -- I think it was August 1979.

Q And you went immediately to work for API?

A I went to work primarily for API. That was the
main area.

Q Mr. Clines was?

A The president and owner of that particular
company .

Q You had no equity?

A I was not a stockholder in that company, and I
was not an officer in that company.

Q You were a consultant?

A Well, I worked as sort of a consultant, employee,

office manager, trying to get the company off the ground.

in
Q Did you ever have any interest /API to be described ^s

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an interest in the equity of the company?

A No.

Q For example, did you ever loan them money?
Did you ever loan them money?

A No, I never lent it money, and they never lent me
money .

Q You never served on the board?

A No, I did not.

Q You were never an officer?

A I was not.

Q As to SSI, what is your relationship with SSI?

A SSI was another one of the companies that was
owned by Mr. Clines. It was, basically, an inactive
company .

Q You say it was inactive?

Q Basically, inactive. In other words, it was
designed, originally, to be a trading company, securities
systems. But my recollection of that period of time, I
don't really remember anything of significance happening
in that particular company.

Q You never received any money from it?

A No. I don't recall receiving any money. Maybe

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some expense funds for things that I did on their specific
behalf, but I didn't see, as far as I can recall, no salary,
no consultant fees.

Q You did do things on its behalf then?
A I think, yes. I had discussions with people to
try to start various kinds of business activity, but it
didn't go anywhere.

Q With whom did you have discussions on its behalf?
A I don't recall. For instance, there were things
like we were trying to export rope to various countries. I
think we tried to find sporting equipment manufactured
overseas, and so forth, to be put into the U.S. market, but
I don't have any real vivid recollection at this point in
time. I mean, that stopped. I haven't been doing anything
with that since 1980. This is 1987. I don't have any real
Q So that would have been between August of '79 and
sometime in 1980?

A No. I retired in August. I started in
September. So September of 1979 to probably somewhere in
about June or July of 1980. There may have been some
administrative items that I was concerned with later, maybe
particularly with API trying to collect funds, and so forth,

UNiliSSIflED

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for the company, but I don't recall any actions with SSI
after, certainly, July of 1980.

Q Who were the other officers, if any, of SSI?

A I don't recall anybody except Mr. Clines. It
was basically his company, and I don't have a list of the
officers.

Q Let ' s move on to RAI .

What's your association with RAI?

A It's a company that I started.

Q When did you start it?

A It's in the corporate records. You've asked for
corporate documents. The corporate documents are in there.
It's probably sometime in 1980.

Q Who are the officers in RAI?

A The officers are myself, Mr. Donald Jameson and
my wife. Hazel Shackley.

Q And the directors?

A The directors are myself, Donald Jameson and a
Mr. Ledbetter.

Q Was there some corporate action that led to your
designation to respond to the RAI subpoena, or did you just
do that in your capacity as president?

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A One of the subpoenas you gave me was for RAI.

Q Correct.

A I'm not sure I understand.

Q When a corporation gets a subpoena, the corporation
decides who to designate. RAI, apparently, since you're here
for RAI, decided to designate you.

A Yes.

Q Who made that decision?

A I did.

Q That's all I wanted.

A I didn't understand the question.

Q You didn't consult with any other people?

A No.

AA Not really, no, because I got a barrel of these,
and I just went to try to respond to them, to the best of
my ability.

Q What is the business of RAI?

A RAI is essentially a risk analysis ccanpany.

Q Does it have certain specialties?

A We work primarily in the oil sector, not
exclusively, but primarily.

Q Does it work in any particular part of the world?

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UNClASSiFIED

A It covers the oil producing countries of the world.

Q Does that mean that it specializes in the Middle
East? Does it also do work, say, in the North Sea?

A Well, we monitor developments in the North Sea.
For instance, we monitor what trends are, what production is,
in that area, what fields are going to be worked over, and
therefore, are being taken out of production, that has an
effect on the market.

Q Do you have a regular clientele, or do you place
your product on the market in some other fashion?

A I have primarily one client.

Q What business is this client in?

A Oil.

Q I assume you're talking about spot purchase and
sale?

A It's a company that engages in oil trading, but
it also has refinery interests.

Q Where's their refinery?

A Their refinery's in the United States.

Q And this client purchases oil on the world market
from various sources, I assume?

A Yes. I'm trying to explain to you, the client is,

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first and foremost, an oil trader. That is, buying and
selling oil, not necessarily related to the spot market.
In some arrangements, oil is purchased on the basis of
contracts or marketing agreements that the client may have
with producing states.

That's one part of this business.
The other part of this business is, he also has
a refinery. Now the refinery may not be able to use the
crude that he's trading in. Therefore, he's got to buy
other crude for the refinery. And so, you know, it's a
multidimensional problem.

Q I understand. Is this the client that is based
in the Bahamas?

A The Bahamas?

Q Yes.

A No.

Q Who is this client?

A The client is Trans-World Oil.

Q Is that sometimes known as TW Oil?

A Yes. There are various corporate entities.
I don't know how many corporate entities they have, but my
main contract is with Trans-World Oil New York.

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Q Is that sometimes — is there an affiliated
company, that is known as Third World Oil also, TWI?

A I do not know of a company called Third World Oil.
There is a company that they have thafs called TW Oil.

Q There's at least two entities that you are aware
of. One is Trans World and the other is TWI?

A Right. TW Oil.

Q They're not different words for the same
corporation ?

A No, they're different corporations. The principal
has a large holding company, and there's a chart I've seen,
you know, of these various companies. For instance, I don't
know if it's TW Oil or Trans-World Oil London, for example.
There's a Trans-World Oil Paris. They have an office in
Tokyo. They have an office in Singapore. But I don't know —
I mean, to me, it's TW Oil. I haven't paid that much
attention to whether it's incorporated in Japan as Trans-World
Oil or TW Oil.

I know of no cattpany that I'm associated with by the
name of Third World Oil. I think that was one of the questions
that you put to me.

Right. Okay.

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Is RAI engaged in any other business besides what
you call risk analysis?

A Well, as an adjunct to risk analysis, we do
security work. We design security systems. We provide
training for corporate security organizations.

Q Is that also in the oil business?

A Ye,, primarily. I don't recall having done a
project for anybody who's not oil-related.

Q Are there additional lines of work that RAI does?

A The other thing that we're involved in is VIP
protection.

Q How does that business operate?

A It's a problem of making an assessment of what kind
of threat there is to a corporate executive or his family or.
his property, then providing a security envelope that's
response to that potential threat. That could include putting
in a security system at an estate, having VIP bodyguard
type individuals travel with the executive as they move about.

Q E)o you actually provide the people to do that?

A Yes, I do. Not in all cases, but —

Q I assume that in providing that kind of individual,
you have — what do you call it — a network, a group of

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people you would call on for that kind of service?

A Depending on what it is. For instance, if it's an
individual who is going to manage one of these programs when
it's established, I may go out and look in the market and
do a talent search, till I find somebody who I believe is
responsive and capable of doing that particular job.

Q And you would keep records that would reflect past
talent searches, in order to help you with possible future
talent searches?

A I have seme resumes, yes. I keep some resumes on
file.

Q Are there other businesses of RAI , other lines of
work that you do?

A No. It's all — you know. I should have brought
you a copy of my article on risk analysis, because I do what is
a full service company in risk analysis. Some people may say —
and I have a situation where a client says, "I'm interested
in acquiring some property. Please go out and take a look at
that property."

That may be property that the client wants to
acquire for personal reasons. It may be property that they
want to acquire for corporate reasons, but I've gone out and

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found property, but that's all under the rubric of risk
analysis. I don't want you coming back to me later and saying
that I wasn't giving you a fulsome answer, but I am trying
to show you what risk analysis is. It's trying to provide
people with information relative to their busienss.

Q Actually, what I was thinking of in the back of
my min^ was, I thought that you had told me in a previous
interview, you also sold oil drilling equipment through RAI .

A Not under RAI. I think you've got that confused.

Q I'm sorry. That was another corporation?

A Yes. API was in the oil field equipment business
and was attempting to sell primarily valves and flanges used
in the oil industry. The primary market at that time was
Mexico and the state enterprise known as Pemex.

Q What period of time was this oil equipment business
being conducted by API?

A My involvement was when I started in September
of 1979 until, basically, I stopped in July of 1980, although
I think after July of 1980, there may have been still some
bills that we were pursuing to get collected. I remember
a long hassle with the Pemex office in Paris. It took a
long time to get paid. That's one of the reasons why that was

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a successful business.

I'll go back to API, so that you can understand
this. The valve and flange business, there was a large
market in Mexico, when the Mexican oil industry was
expanding, all right? But the way the Mexican oil industry
was run^ what we did on these valve and flange orders, a
small company like API would generally only be in a situation
to obtain contracts under $1 million.

The other thing was, Pemex was using a computer
system to take off of everybody's bid list what might be
considered your loss leader, all right? So your smallest
profit item on your list would be picked up by Pemex. If
I had found a producer, let's say, in Italy or somewhere, who
could make it for a dollar cheaper, that was one problem.
Two, you couldn't get the vol'jme. Three, Pemex was notoriously
slow in paying. In other words, they never paid on delivery.
And the fourth dilemma was that at that time, the dollar-peso
ratio was declining. So, in other words, you were losing
money the longer your money was out, because the peso was
being devalued. So when you took this conglomerate of these
things, despite the fact that you could sell, you couldn't
make any money, and it took me that long to figure that out.

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Now, you know, you might have found it out quicker,
but that's how long it took me to figure it out from
September 1979 to, roughly, July, but there were some loose
ends that had to be cleaned up after that, and I think I did
clean those up after that, although I was not involved.

Q What other people were involved in the Pemex oil
business that you're aware of?

MR. MC KAY: You mean with him, with respect to
API or just in general in the world?

MR. HOLMES: Let's start with API and go from
there .

THE WITNESS: Other people that were involved.
There's a gentleman by the name of Richard Finney.
BY MR. HOLMES:
Q Anybody else?

A Yes. Ricardo Chavez. He was in Mexico.
Q Were they operating for API in their Pemex
dealings?

A Yes. And the other individual involved was
Quintero.

Q Rafael Quintero?
A Right .

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Q How were they capitalized?

MR. MC KAY: I'm sorry. How was who capitalized?
BY MR. HOLMES:

Q How were these people capitalized in their dealings
with Pemex for API?

A You're going to have to state that question some
other way, because I'm not sure what you're asking.

Q Do you know anything about where they got their
money to do any of these deals?

A API had some funds. Mr. Clines had put funds into
the company. When you issued what was, in effect, a bid
in response to a request for a proposal, Pemex periodically
would put out requests for equipment, a bid. Once you got
on the Pemex list, you automatically got a receipt of whatever
they were looking for at a particular point in time. So,
let's say, once every month, once every six weeks, once
every eight weeks, depending on what their needs were and
what their forecast needs were, Pemex would issue a request
for proposal. You would then see what they were looking for,
and you had a deadline within which to bid.

So then you would go out to your suppliers and get
bids from them, and they put the package together, and if you

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actually had to buy, then you had to provide the funds, and
you got the award.

Q And the f winds that Messrs. Finney , Chavez and
Quinterc' would rely on in making those bids were API funds?

A Were API funds.

Q Was there any subsidiary or budget unit of API
that was designated as the profit center for this particular
operation?

A No.

Q It was an activity of API?

A This was API; yes.

Q Are you aware of any loans that were ever made
to Finney, Chavez or Quintero in relation to the Mexican
oil industry?

A I'm not aware of any loans that were made to
Mr. Finney, and I'm not aware of any for Chavez and
Quintero, but I would have have less knowledge of that.

Q Did you ever arrange connections or contacts
for Quintero, whereby he was supposed to get a loan for
his activities?

A I have no memory of anything like that.

Q Have we gotten to the bottom of the well on

UNE^SIflED

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RAI's business activities.

A As far as I know.

MR. HOLMES: Now you produced a handsome box of
records to us in response to the RAI subpoena.

I am going to ask the court reporter to make this
entire box Exhibit No. 6.

(Shackley Deposition Exhibit 6
identified.)
BY MR. HOLMES:
Q Mr. Shackley, I'm showing you what's marked now
as Exhibit No. 6, the box. Let me ask you, just in general,
if you have subdivided these folders which you have provided
into subdivisions, in accordance with the subpoena.

Is that the significance of this one here that
says '! Appendix 1, Paragraph 3"?

A That's a division, to the best of our knowledge,
in response to this, because in some of these areas, they
overlap. That's the way we felt we were responding.

Q So would it be fair for me to infer from that
that you personally have gone through the records of RAI
and that what is in Exhibit No. 6, the box, is everything
that, in your opinion, responded to each of these sections

UNCEASSra

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of the subpoena?

A No. That's not correct.

Q Let's hone that down, because I understand from
the letter, which is Exhibit No. 5, that there are some
rough edges, and that's what I want to get at now.

A First of all, I had a search made of RAI files
by one of my employees in response to that list.

Q Who was that en^loyee?
Mrs. Keating.
You did not make a search personally of the RAI

Q
files?

A I did not go through each file. I gave her the
list. She's the one who works with the files on a daily
basis. I then looked at the material which she produced,
provided, checked it against my memory to see if there's
anything I could think of that was not there. And that's the
way the work was put together.

Q So it would net be accurate to see that you only
want on what Mrs. Keating produced, because you also
inventoried your own memory to make sure that her production
was complete?

A And on the financial material, and so forth.

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Mrs. Shackley, my daughter also went through this. You know,
I'm a small company. I'm a family-oriented company. My wife
works, my daughter also works there. They also went through
corporate records, financial activity, which is what they
deal with on a regular day-to-day basis. For instance, like
there, our W-2s attached there. I didn't go to the W-2 files
for the various years and pulled them out, personally. That
was done by Mrs. Shackley. The computer run and the financial
statement, I think, was done by my daughter.

Q Let me break down what we ' re talking about into
littler bits as to what's in the box. It's your testimony
that you don't remember, having cotpared your memory with each
paragraph of the subpoena, anything that should have or
would have been in ^K^ files that is not brought forward into
this box. Exhibit 6?

A I guess I'm not making myself clear.

MR. MC KAY: The other caveat obviously is, it's
not in my letter.

MR. HOLMES: That's the next caveat, okay?
BY MR. HOLMES:

Q The next caveat is that, as you have stated

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UNCraflED

through your attorney in what is Exhibit 5, the letter,
there are certain categories of things that you have not
placed in the box, pursuant to some concerns that you and
your attorney have; is that accurate?
A That's correct.

Q Let's get to those categories, so that we can
complete that issue here. Then we'll simply duplicate it.
We'll duplicate it for TGS, I assume. Well, let me ask this
question now, so that we can do it all at once.

You followed the same procedures and exhibited
the same concerns with TGS?

A Yes, but different people were involved. In
other words, the file search was made by a different person.
There's a main file search. On that one, the financial
records and stuff were done primarily by Mrs. Shackley.

I reviewed that material that was provided'
looked against the subpoena, tried to see if there was
anything I thought had been missing that I could think of.

MR. MC KAY: One second.

(Counsel conferred with witness.)

THE WITNESS: I'm trying to convey to you that
a lot of this material, you know, stacks were brought in.

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and someone would say, "Hey, look, here's a file. Like
on the Kuwait project. "When did we do this project."
On TGS, you know, we excluded certain categories of projects
that were discussed with you.

BY MR. HOLMES:
Q Now I want to get into what's excluded, so that
the record will accurately reflect what's here and what's
not here, so that we'll have that information.

Could you go into that now, for the purposes of .
— I'll ask you which is easier for you. Would it be
easier for you to deal with it with RAI and TGS together
or separately?

A I think we have to deal with that separately,
because the issues are different.

Q Let's start with RAI and tell me about what's
Hot here pursuant to the subpoena.

MR. MC KAY: Let me just state that we tried in
the attachment to the letter to detail what's not here.
I think the best thing he can do is to go back to the
letter and tell you what's there, because we worked in
trying to list everything here. I don't know the purpose
of trying to get it from his memory, because you may not

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get as accurate a list.

MR. HOLMES: Thanks. Maybe it would save time.
BY MR. HOLMES:
Q Mr. Shackley, you're looking at what's marked
Exhibit No. 5, the letter and its attachment. Have you
seen that letter and its attacheroent before?
A Yes.

Q It was prepared by you and with your knowledge?
A Yes.

Q And it's accurate and describes truly what you
did and what you included and what you didn't include?
A That's correct.

Q Fine. We don't have to go through it orally.
Does that letter — I didn't recall whether
it split out RAI and TGS.

A It deals with — here, for instance, it deals
with both of them.

(A pause. )

I can't find what I'm looking for. Where's the
paragraph here? No.

(Counsel conferred with witness.)

MR. MC KAY: The question is whether the

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UNeiASSIFIED

letter or the attachment treats both companies.

THE WITNESS: The answer is yes, we're trying to
respond for both companies.
BY MR. HOLMES:

Q At once?

A Right. In the same letter.

Q Let ' s move on then to TGS .

Could you describe your business at TGS and your
affiliation with it?

A TGS is primarily a logistics problem-solving
company .

Q Could you explain to me what that means?

A We have done several things. We have been
involved with modular storage equipment. We have a
relationship with the Stanley Vidmer Company, which makes
modular storage equipment. The rule of thumb, basically, is
if you take a warehouse and you have open shelving in it,
you can reduce the floor space in that warehouse by 50
percent by going from open storage shelving to modular
storage shelving. That's the kind of thing that we have been
working on as our primary activity.

Q What other activities does the organization

UNei^SlfKD

mtmB

have? ^

A We have worked on local construction in the
Washington Metropolitan Area, primarily, home remodeling
kind of activities. I think we remodeled one small
warehouse also, in the course of this activity.

Q Do you do that with your own employees, or is
that subcontracted to other contractors?

A We have done that, basically, with our own
employees, but we have closed that out.

When we were doing that — let me answer you/-
question. When we were doing that, we were doing it,
basically, with our own employees, but we have closed that
activity out.

Q How many homes did you remodel?

A I don't know. I would have to go look at the
records. I think we did that around here for maybe about

a year.

Q Approximately how many homes?

A I have no idea. I really couldn't just dredge
it out of my memory. It's in the files. But it's putting
in patios, porches, enclosing opened garages to closed
garages, upgrading. I have no idea. It's a very modest

UNerariED

uNeassifiED

number.

Q And each one of those homes would be reflected
in the TGS file?

A The volume of business would be reflected; yes.
Q But not the owner of the home?
A No.

Q No invoices?

A I don't think an individual breakdown; no. j
The individual invoices for each individual job that we
did is not in that, I don't think. I don't recall it. i

MR. MC KAY: The only way it would be there is
if it related to one of the named individuals, because
there wouldn't be anything that asked for TGS's. As I
read the subpoena, it is a description of his line of
business. If there was anybody on the list, or the
named individuals for whom there was any work, that would hav«
been produced. I don't think it was.
(A pause. )

MR. HOLMES: I read Attachment a to read
"Provision of any service." Remodeling is a service.
THE WITNESS: Well, it's reflected in our
financial reports, and so forth, but not breakdown by

wsmm

lINCUSSmED

any individual project. "Enclose the garage at 1011-5th
Street" or something like that.

MR. HOLMES : I interpret the subpoena to
require that kind of invoice or whatever you call it, a
contract.

MR. MC KAY: If you interpreted the subpoena
that way, that would mean every document that the company
ever, because its business is providing services. It would!
be every business deal the corporation ever had. I

MR. HOLMES: I'm only talking about a very j
modest number of homes.

MR. MC KAY: You gave us a list of 50 or 60
individuals, and we responded with respect to those.
I assume that those are the individuals that the committee
is concerned with, and not that Mary Smith had her garage

enclosed by TGS at some point. I didn't interpret it to •

I
mean every service provided by anybody or to anybody, and

we have not produced every garage contract or whatever. ;

In fact, we haven't produced any of those contracts, \

because I did not interpret it that way. If there was

anything for any of the 50 or 60 nauned individuals or 50

or 60 named companies, that has been produced.

UNCUSSIRED

UNCUWD

39 !

BY MR. HOLMES:

Q Do any of these modifications involve electronics?

A No.

Q You're talking strictly nonelectronic?

A I mean — look, if you put in -- in .some place, '

I think we may have put in a garage door. Is that electronic,'

because you have a door that electrically raises, you know? |

No. I think we did put in some doors in the course of these

— making these modifications. i

I
Q All right.

A I mean, if you're asking, did that include i
installation with these modifications in these houses of
security systems — is that what you're saying?

Q That was what was on my mind, yes.

A No. We did not put in any security systems.

Q Other than the modular storage and local [

I
construction, does TGS engage in other lines of business?

A Yes. At times we have been involved in food '■

I
brokerage. j

Q From whom to whom?

A We bought food, as an example,

Q Have you ever brokered food originating in Iran?

UKCUSSIHED

HHtuasw

A No, I have not brokered any food. We have had
some correspondence, and the files are in there, with two
Iranian entities. One was on Iranian caviar, and nothing ever
came of that. We couldn't find a market for it. And the other
one was an exchange of telex correspondence in an attempt to
see if food supplies, various canned foods and so forth, could
be produced and sent to Iran. Nothing came of that.

Q What were the approximate dates of these two
potential —

A Can I look at the files? I mean, they're in the

files .

Q Sure.

MR. HOLMES: At this point, why don't we mark the
second box. Exhibit No. 7.

(Shackley Deposition Exhibit 7
identified. )
THE WITNESS: There's a file in here called
GTC, Government Trading Corporation.
BY MR. HOLMES:
Q That relates to food brokerage; is that right?
A Yes. This was GTC, Government Trading
Corporation. There was a telex sent.

wmm^

Q What is GTC?

A It's called —

Q I'm asking you —

A -- Government Trading Corporation.
■ Q It's a corporation?

A It's an Iranian corporation. It's what I
understand to be Government Trading Corporation. That's their
initials.

Q Is it a government corporation, or is it a
group of Iranians calling themselves GTC?

A They buy for the Iranian government. As far as
I know, it's a governmental trading company, an Iranian
governmental trading company.

Q Who are the principals of GTC?

A I have no idea.

Q Who did you deal with?

A One of my associates, Mr. Monaga, sent a telex
here to the managing director of the company. I'll spell
his name for you. M-o-v-a-h-e-di-z-a-d-e-h.

Q And nothing came of this?

A No; nothing came of it.

Q Are there other lines of business that TGS is

\immm

I engaged in?

if A Okay. The food brokerage. I've covered those with
I you; right?

I All right. We have looked at various items that

are connected with logistics problem-solving. We have looked

at trying to get furniture requirements to Saudi Arabia, as
an example, for large projects. I think there's corres-
pondence in here on several such attempts, transactions.

At various times we've looked at various kinds of .
airplane transactions.

Q Do any of those airplane transactions that you've
looked at, whether you've completed or not, involve either
a military style airplane or a transport style airplane?

A No. Well, I don't know. What do you consider
a 747? We tried to look for 747s in the United States that
would be bought by an Italian company for use in China.

Q For use as transport planes in China? ' "■•,

A I don't know. The Chinese had not made up their
mind how they wanted them configured. They were looking
at various configurations. In other words, that was one
thing that caused the deal not to go anywhere. The Chinese
were looking at one configuration to have the airplane

UNCUSSIHEO

WBmm

passenger. Another configuration was to split the airplane,
to have it passenger and cargo. Another configuration was
to make the airplane completely cargo. Let's say, at some
point in time, which I think is prior to the time of the
subpoena, I think we may have looked at other airplanes, the
Buffalo airplane out of Canada.

Q Is that Buffalo related to the Caravan?

A It's that type of an airplane. It's probably a
civilian version of something like the C-123, C-130.

Q Who were the principals involved in that potential
deal?

A Let's see, I think that was — I think that might
have been Honduras. I'd have to check the files.

Q They were the buyer, I assume?

A Yes. They were the buyer.

Q And you were dealing with a manufacturer in Canada?

A Yes. The manufacturer. I've forgotten the name of
the company who makes those.

1 DeHavilland makes the Ccuribou.

A This was DeHavilland. It's the Scune company,
deHavilland, because one of the people went up to talk to than.

Q Why did deHavilland need somebody to broker a sale.

UNOIAMED

wmM

since they're the manufacturer?

A You know, a lot depends on the market, some of
these markets, where they are only sellinglone /off (airplane ,
they're not pursuing those markets. They're looking, you
know, they're concentrating on the market where they can sell
four, five, six airplanes. If you come in with sort of a
one-off arrangement to the manufacturer, they frequently
are interested.

So you're looking for that unusual opportunity
or opening.

Q When was this discussion or series of discussions?

A That was prior to 1982 but I don't remember whether
that was in '81 or '80. I would have to go into the files.
I'm so tired of looking at files. I've been working on this
so long, you know, that, frankly, I'm exhausted, and I'm
having trouble recalling some of these.

Q Let's get away from files a little bit then.

We have before us in Exhibits 6 and 7, the records
of TGS and RAI responsive to the subpoena, with the exception
of records described in Exhibit No. 5, the letter; is that
right?

A Yes.

UNiLASSIRED

BHHtHSSJmO

MR. MC KAY: That's correct.

BY MR. HOLMES:
Q Now I'd like to know whether you, Mr. Shackley,
personally, have access to records, in addition to those in
6 and 7 , other that what ' s described in 5 , that would be
responsive to your personal subpoena.

MR. MC KAY: The subpoena to Mr. Shackley asked
him to produce, with regard to API, SSI, TGS and Research
Associates International, all materials relating to.

Are you asking him if he has documents regarding
those four entities, that are not produced?

(Document handed to counsel.)

MR. HOLMES: That's certainly subsumed in my
question, but you'll notice that's only one category out of
a total of five categories. Category number 3 is very
inclusive, because it includes the appendix. So those
qualifications only apply to category nximber one out of five.
If you would like to answer one category at a time, I'll
take his answer like that.

MR. MC KAY: Let us confirm that.
(Counsel conferred with witness.)

MR. MC KAY: Why don't you take it a category at a

\iimmh

wismm

time, and he'll tell you what he did.
BY MR. HOLMES:
Q Okay, Mr. Shackley, you're looking at the Shackley
su±)poena . I guess it's Exhibit No. 1.

Now, with regard to subpart number 1 on Attachment
A, you've just answered that you don't have anything else in
your personal capacity that relates to that category, other
than what's either in these two boxes in front of us or
excepted from the boxes by the letter.

A Yeah. You're looking at one, API Distributor
System Services.

Q Just so that we're clear on this, you have said
that the reason that you haven't produced anything with
regard to API or SSI is that you have no obligation to do so,
not being an officer or affiliated with those corporations.
MR. MC KAY: We didn't interpret it that narrowly.
BY MR. HOLMES:
Q But if you had records belonging to or relating to
those companies in your files, they would be called for
under this subpoena in your personal capacity. You
understand —

A Well, let me try to answer this another way. The

BNe^Bsm

w&mm

records of those companies I do not have.

Q That's what I wanted to know.

A So we can boil that down, I think, to the essential,
I don 't have the records of those companies. Those records,
the last I know of them, were in Mr. Clines' possession.

Q Before we go further on the description of
compliance with the subpoena, get a little bit into what
"have" means. You understand that "have" includes have
access to or control over through any agent, attorney, your'
wife, friend, a safe deposit box, a storage facility of any
kind.

A Uh-huh.

Q Anything like that, any control like that would
still be sufficient control for you to be obliged to
produce it.

You understand that?

A I understand that.

Q I just didn't want to be talking past you on this
and you know, I haven't got it. Good.

A Let me just make sure that you understand what
I'm saying. The last time I saw those records, the corporate

mmm

UNeUSSIHED

records of API Distributors, you know. Systems Services
International, they were in Mr. dines' possession. They
I were given to him. They were his records. They belonged
to a corporation that he owned.

Q When was the last time that you saw those records?
A I would say I moved up to ray current office location
in, I think, in January of 1982, and thafs sometime prior
to 1981, would have been the last time that I would have seen
any of those records .

Q All right. While we're on that, while that subject
is on the table, let me clarify another aspect of subpoenas.
If you have, in the broad sense, records when a subpoena is
served and you divest yourself of control of documents after
the subpoena is served, that doesn't avoid your obligation to
produce those records.

You understand that, I'm sure.
A Yes.
Q I just didn't want to miss that possibility.

All right. With regard to subpart number 2 of your
personal subpoena. Exhibit 1, do you have any such documents,
in the broad sease of "have," we just discussed?

MR. MC KAY: That we haven't produced or that are not

fWMJSiWffl

UNCUSSIHED

covered by the letter.

MR. HOLMES: Certainly.

THE WITNESS: No. I think we've covered
everything, as far as I can see. I don't really even know
what you're saying here. In other words, on 2 , do I have
any documents on — I may have a newspaper clipping or
something. I don't know.

MR. .MC KAY: He's asking about personal files.'

THE WITNESS: Personal files? No.

BY MR. HOLMES:
Q The reason this comes up, Mr. Shackley, is that
you've come forward in response to five subpoenas with two
boxes of records, each box identified to a particular
corporation.

A Uh-huh.

Q As to the other two corporations, you say, no
proper service really. You're asking the wrong guy.

MR. MC KAY: I don't think we're saying that at
all. We're saying he doesn't have any documents. That's
what my letter says.

MR. HOLMES: That's those two corporations.
Then we have these two corporations. Exhibit 6 and 7. And

UNGlASSinED

UNCkASSIFIED

what I'm pointing out is, that you have a totally
independent personal obligation under your personal subpoena
to produce any documents, whether it has to do with these
corporations or not, or in your capacity as a corporate
officer or not, simply because you have control of documents
described by the subpoena. I am confident that you
understood that, but I'm making it clear that I'm asking
for documents under the personal subpoena now and not under
either or any of the four corporate subpoenas.

THE WITNESS: I told you I don't have the
documents.

BY MR. HOLMES:
Q Let me reask the question.
A Am I missing something?
Q That's what I'm trying to find out.
A I'm not following you, because, for instance, I
don't have any files. I've told you I don't have any files
for API. I don't have any for SSI. The files that are
pertinent in relationship to these subpoenas that deal with
our RAI, TGS and my business with those companies have been
produced. ~

Q And if we assume that to be the case, which we

UltlSJlSfaFIED

WKUSSW

do at this point, the same inquiry is, do you have, in any
personal capacity or any control whatsoever over any
documents described in 2 through 5 of your personal
subpoena, which are not limited to those four corporations
named?

A No, I don't. Citizens Held Hostage. Everything
that's Citizens Held Hostage is in the RAI files. Going down
this thing, I don't have any Assistance to Nicaragua. I've
told you that.

Q Not exactly, Mr. Shackley. And I don't want to
be inordinately technical, but if I understand what you're
saying, it's not exactly what the subpoena asks you for.
You have said in your opening statement that you didn't
supply anything to Nicaragua, but that's not what this
subpoena asks for. It asks for any documents relating to
anybody's doing any of these things, you or anybody else
in the world.

A I don't have anything on anybody doing anything
in Nicaragua, which are documents.

MR. MC KAY: That's not produced?

THE WITNESS: That's not produced.

I've written a book on guerrilla warfare. Maybe

UNCLASSIFIED

UNDlASSinED

I've got some newspaper clippings, but that's not applicable.

BY MR. HOLMES:
Q Well, it would be applicable, but I'm willing to
concede that your book and your newspaper clippings are not
something that we want.

MR. MC KAY: He's asking — for instance, I
suppose if you had a letter at home in your files relating
to selling food to Iran, because it's one of the countries.

THE WITNESS: No, I don't.

MR. MC KAY: He's asking if you have anything,
just because it's not in the corporate files — he's trying
to make sure that we produced anything in your personal
files .

THE WITNESS: I have nothing on this attachment 1.
I have nothing on any of these people. I have nothing on
any of these corporations. I told him that I corresponded
with CIA on clearing articles that I published. I think
I've published some articles since 1982, which stated that
— you know, I don't have it.

BY MR. HOLMES:
Q In particular, drawing your attention to
subsection 3, it's your testimony that you've gone down the

ONeiiSSIFIED

uNEiissra

whole appendix in its various parts, and you have nothing
relating to any of those individuals of entities, other
than what's in these boxes.

It just strikes me —

MR. MC KAY: You've got a time frame, first of
all.

BY MR. HOLMES:
Q Yes. Within the time frame.
A January 1982. For instance, on the lawsuit —

MR. MC KAY: That's described in the letter.

THE WITNESS: That's in the letter.

MR. MC KAY: But again, he's asking if it's not
in a file back at TGS or RAI that's a corporate file, have
you got a document in some other file that's about <» I Wfc
*»* or any of these people?

THE WITNESS: No, I don't have a file on Awron Near
or any of these people, any of these entities.
BY MR. HOLMES:
Q Or any of these entities? Any of these people
or entities described in the appendix at all?
A No.
Q You have a remarkably file-free life.

UNCUtSSIFIED

UNDIJISMD

A Why would I have it?

MR. MC KAY: On the contrary, he's got lots of
i; files. That was one of the problems.
BY MR. HOLMES:
Q Let me explore with you, apart from the subpoena
production, your relationship with some individuals that
have importance to our investigation.

I will clarify for you that when I ask questions
apart from the subpoena, I am not limiting my question to
1982 or any wording in the subpoena. We're just talking
strictly the question of — the question you hear is the
question I'm asking, unfiltered through the subpoenas.

MR. MC KAY: I would interpose an objection at
the time it comes up. I don't even want to know why the
committee is interested back to '82, but if we are going to
go back into the '70s, I really have a serious relevance
question about what it has to do with what the committee's
investigating .

MR. HOLMES: If there's a problem with a
particular question, let me know. It seems perfectly
clear to me, for example, if I ask about a relationship
with Secord, and it predates 1982, then that's relevant.

mmxB

UNIS^SIFe

MR. MC KAY: We'll take care of it when it comes
up.

BY MR. HOLMES:

Q I'd like to begin, Mr. Shackley, by asking you
about your past dealings with various principals in the
investigation. I'd like to start with Mr. Hakim, Albert
Hakim.

Have you met Mr . Hakim?

A Yes. I've met Mr. Hakim.

Q When did you first meet him?

A I don't remember. It was when I was still in
the Agency.

Q What were the circumstances of your meeting?

A Let's see. If I'm not mistaken, Ed Wilson
introduced me to him.

Q Where?

A In a Washington restaurant.

Q What was the occasion?

A HakiiB was introduced to me as an individual who
was knowledgeable about current developments in Iran.

Q What time period are we taking about?

A I don't remember what year that was. It could be

UNimFIED

wimsm

MR. MC KAY: I don't want you to guess. Before
1979, obviously.

THE WITNESS: We're talking back a long period of
time. It could have been --
BY MR. HOLMES:
Q Maybe if you could place the events that he was
supposed to be knowledgeable about.

A It was the conditions in Iran.
Q The imminent fall of the Shah, perhaps?
A No. Let me just see what it was.
(A pause.)

No. Maybe 1976, 1977. Somewhere in that period,
but I can't really pin it down, and look —

Q If you need to qualify an answer like that, that's
no problem at all.

A I can't pin it dovm.

Q I just want to know whether we're talking aOsout
1965.

A No, no. I can't pin it down. But I'm sure, if
you're interested, you can find the records and names.
Q Was anybody else present at the meeting?
A I don't recall at this time. I mean, I remember

IINIMfHED

wmms

meeting Hakim. I remember having lunch with him. I remember
writing up a report on it.

Q Your meeting was reported to the CIA, then?

A Yes.

Q Through what channels would that have occurred?

A I don't know, the CIA. I came back, I wrote a
memorandum and put it, you know, the normal distribution
mechanism. I probably sent it to the Geographic Area
Division for them to look at and to take any action that's
appropriate.

Q Were you recommending any action?

A No. I reported what had been told to me and
what I recall of the sequence of events. The people in
Iran carae back and said they weren't interested. They had
better contacts, and that was the end of it.

Q Weren't interested in what?

A Weren't interested in his contacts, the contacts
that he had in Iran.

Q The idea was that Hakim would be willing to
supply information to the OIA on developments in Iran?

A No. I met him. He talked about his
circumstances in Iran. I asked him who he knew, what

UNClASSinED

UNCUSSWD

kind of business he was in, and so forth. I simply took
note of all of that and tried to access what utility that
could be. I put it into the Geographic Area Component.
They came back in a short period of time and said they
weren't interested, and that's where it dropped.

Q I'm still missing what they weren't interested in.
They weren't interested in knowing anything that Hakim
knew?

A No. They weren't interested in pursuing it, in .
other words .

Q "Pursuing it" would mean developing Hakim as
a reporting source?

A Or getting him to introduce them to a particular
individual that he might have known in Iran, so they could
develop that individual.

In other words, they simply felt that they had
that sector covered, and I simply let it drop.

Q What relationship did Wilson have with Hakim at
that time?

A They were in some sort of business together.

Q Do you know what business it was?

A No. I know they were in business or had done

UNCLASSIFIED

some business, but I don't recall. I know Hakim has said

:i since then, I've heard him say, you know, I can't pji it down,
what year, what date, but I know that he sued Wilson over
something in this dispute that they had. So I know they were
in business together.

Q In your recommendations, did you recommend any
particular person or type of individual to try and operate
through developing Hakim's information?

A I have no recollection of that.

All I recall is a meeting, writing it up, turning
it in. Nothing came of it. I accepted the judgments that
were exercised by the people at that time. They said they
weren't interested in pursuing it, and I let it drop.

Q Had you known of Hakim before?

A No.

Q You never heard his ncime?

A No. I think probably the way this occurred was,
you know — "I'd like you to meet an interesting guy or have
lunch with an interesting guy who has something to do with
Iran. Why don't you come around and talk to him?"

Q And since that time, when was your next contact
with Hakim or Hakim's name?

UNCIASSra

UNCIASSIFIED

A I don't have — sometime probably in 1980, after
I I retired, is when I next remember seeing him or meeting him.
I Q You haven't hea^ of him in the meantime?

A I don't recall any, you know, conversations about
him. He certainly was not on any kind of thing that I was
concerned about. I just don't have any memory of him. I
remember meeting him once. I have no memory of the man until
after I retired.

Q What is your next memory of him?

A My next memory of him is after I retired. As I
recall, he called me up in Washington and said he was in
town and would like to get together.

Q Did you meet with him?

A Yes, I did.

Q Was anybody else there?

A I don't recall.

Q That was like another restaurant type meeting?

A Yes. It was just a matter of getting acquainted.
"I understand you're retired. What are you doing?"

Q Did he tell you what kind of businesses he was
involved with?

A I think at that time, he was primarily interested

Mmm

yNI^SSIHED

in the electronics business.

Q Did he tell you what his electronics business
might have that might be of interest to you?

A I don't recall at that time that coming up,
because I had a brief meeting, and this is many years ago.
I don't recall that. At some later point, yes, I knew he had
a company called Stanford Technology. I don't think that
came up at this thing. I don't remember that.

Q I don't want to presume something in the meeting
that wasn't there, but it seems like if the guy was going
to call you to get acquainted, you would come away from
the meeting with some idea of what it was that he thought
would be of mutual benefit to you too.

A He's a guy who likes to be in touch with a lot
of people. He's always looking at business opportunities,
and you know, I told him what I was doing at that particular
time. I was concentrating on the oil field equipment
business, API Distributors, looking at the Mexican market.

Q Would it be fair that your assessment of the
meeting was that you were simply exchanging knowledge of
each other's whereabouts and abilities for future possible
reference?

mmssm

WMVB

A I don't think it was for any future possible
'I reference. It was just get acquainted, what are you doing?
And what are you up to? That's all. I can't read anything
else into it. I don't have any other memory of it. I just
remember, meeting him and having a chat with him.
Q When did you next hear of him?

A I next heard of him after — sometime after the
Iran-Iraq War broke out. The Iran-Iraq War started in
September 1980.

Q So your second meeting with him would have been
after September of '79 and before September of '80?

A Probably somewhere in that time frame.. I remember
sort of meeting him and then again after the Iran-Iraq War
broke out.

Q How did this meeting occur?

A I think he was in Washington and simply called me
up on the telephone. That's my memory of it.
Q And there was a meeting?
A Yes, there was a meeting.
Q Who else was present?

A I don't recall anybody else being present.
Q What was the purpose of this meeting?

UNIUSSIFIED

uneu^sfiti)

A He was interested in the Iran-Iraq War.

Q What was his interest?

A His interest was essentially in monitoring
developments in that war.

Like a lot of people. When the war started in
September 1980, it was believed that it was going to be a
very short war. A lot of people were out monitoring
developments in the war, particularly monitoring what was
happening to industrial activity in Iran.

Q Meaning the degree of destruction of the
industrial base?

A Right. One thing, as an example, that a lot of
people were interested in, I remember Hakim was also
interested in it, was the Abadan Refinery. The thought at
that time was, that if the war was short and you could
figure out how much damage was done, you could go in
quickly and put together a proposal for the repair of that
refinery and put it back into operation. And as I was
working in oil field equipment-related areas and activities,
and we were talking about the war and the oil business, I
was also, at this point in time, pretty well convinced that
the oil-field equipment wasn't going to go anywhere. I was

liHomm

mmm

630U

going to go off and do something. I primarily had made up
my mind I was going to work in the risk analysis arena.
So that is the kind of conversation we had.
Q At this point, I gather, your mutual benefit
is sort of more clear, since you are in the oil equipment
business, and he's thinking about the sale of oil equipment
to Iran, after the war is over.

Was that the gist of the conversation?
A No. I think you're trying to read into all of
these, you know, much more than there is. People meet.
They simply discuss things, and it doesn't necessarily have to
be any future content to one of these discussions. I mean,
there's not a commitment. I'll meet you for lunch today, and
we're going to do a deal six months from now.

Q Oh, well, no. I didn't mean to imply a
commitment or anything like that. It's just that you would i)e-
an obvious guy to get together with, now that he's thinking
about the Ahadan refinery.

A Well, he was interested in monitoring the war and
that aspect of it.

Q Did he want you to do anything in particular in
relation to monitoring, like provide what you were thinking

UNCMFIED

wmim

of getting involved with, risk analysis?

A No. I don't think at that particular point in
time, but somewhere after the war had been on for a while,
and I had gone ahead and gotten into the risk analysis
business, I did talk to Hakim about monitoring the war for
him, and I did enter into a relationship with him, where
I did provide him with reports on the war and on general
tends in the Middle East.

Q When did that begin, approximately?

A Maybe 19 — let's see. The war started in 1980.
It was probably sometime in 1981, the best I can recall.

Q Was there a contract memorializing that under-
standing, or did you simply begin selling the risk analysis
services?

A I think we had discussions of various art forms
under which we could cooperate, but what we finally worked
out was that I was paid a retainer, so much per month. I
think there are some invoices in the files.

Q That would be the retainer, plus office expenses,
plus travel expenses, plus secretarial?

A Well, no. It was essentially a retainer fee. If
I traveled, you know, I was reimbursed for -travel expenses.

UNCIASSIRED

mmm

Q All right. And I recall seeing soine invoices
like that that had flat rate for secretarial, office,
overhead type of thing.

A That's another item. I also worked with him and
provided office space for an individual that he was also
using the monitor the war. Mr. Razmara. He was paying
Mr. Razmara a retainer, and I was billing him for the
secretarial services, office space and other things that were
being used by Mr. Razmara.

Q Let's work back from Razmara.

Was Razmara a person that you knew first or Hakim
knew first?

A That I don't know. I don't know the answer to
that question.

Q Did Razmara ccxne to you as a person that Hakim
wanted to help monitor the situation, or was he somebody that
was already on your staff, and Hakim said, well, I'll pay
you, and I'll pay Razmara?

A No. I knew Mr. Razmara and Mr. Hakim knew
Mr. Razmara. Which came first, the chicken or the egg, I
don't know. I met Mr. Razmara after he became an exile in
the United States. I had seen him once or twice.

\\u

wmw

Q I assume that was shortly after the fall of the
Shah?

A Yes. That would have to be, I don't know, maybe
'81, '82. I can't put any dates on it any closer than that.
That's the first time I recall meeting him here in the States.

Q I'm sorry. I asked the question inartfully. That
got us a little bit off-base.

Just tell me how it came to pass that you and
Razmara were both sitting in office space in Rcjglyn working.
for Hakim as consultants on the war.

A Well, as I told you, I met Razmara here in
Washington. He was looking for a job. I think he did some
analytical work for me. I probably paid him a minor retainer
of some sort.

Q That was before he was working for Hakim?

A Then Hakim and Razmara got together somehow. I
don't know how they got together, maybe through some other
friends. I simply can't recall. I don't know. If you're
interested in pursuing it. Call in Razmara and call in
Hakim. I don't know.

Then Hakim was interested in covering that war and
was interested in some of Mr. Razmara 's contacts in the

MIISSW

MWED

Middle East looking for business, and he came to me with a
proposal. "How about providing office space, secretarial
space, and so forth, for Mr. Razmara?"
That's what I did.

Q That's what I wanted to know. It was Hakim that
brought Razmara together with you for this opportunity?

A No. We were already in touch, but that's my
best recollection that he came up with some sort of a
proposal.

Q Were you and Razmara supposed to be working
independently of each other on the project, getting paid
separately?

A Mr. Razmara was getting paid through me. In other
words, I was doing it as an accommodation. Hakim was paying
me the retainer that I was on. He was paying me for the
invoices I was billing him for. Mr. Razmara ' s secretarial
things, and so forth. And then I paid Mr. Razmara.

Q I see. Did Razmara do any other work for you,
in addition to the Hakim work?

A No. But we exchanged — I mean, it's like a
cross rep. He might make a call to somebody to talk to
somebody about Iran or the Iraq War. I had some

IJNWKD

information. We poouLed our information. We discussed it,
and this was probably a synthesis of the two that ended up
in a product.

Mr. Razmara's English, spoken English, is very
good. He's a graduate of a U.S. university. He doesn't
write English all that well. He would write reports. We
would edit them for them and put them into English.

Q All right. How long did this relationship with
Hakim continue as regards to yourself?

A There are invoices in billings there. You can
check the file. I think maybe 198 2, somewhere in that
period. Although maybe we didn't get our last payments from
him until 1983.

Q It ended in '82 or '83 then?

A Yes. I would say probably December of '82, but we
may have still had correspondence with him. He was a slow
payer. I mean, you know, it just took him a long time to pay
his bills, and I think maybe I had correspondence with him
running through 1983 on that.

Q What was the reason for your discontinuation of
that relationship?

A Basically, because it was clear that the war was

mM!^^

going t* go on, you know, for a long period of time, and his
original concept and interest in business stemming from that
war just wasn't realistic.

Q So he was the one who decided that it was just
not economically a good idea?

A Well, I think I also said, you know, look, this
is not going to be a short-term war. By then it was pretty
clear that the war was going to be a long war. You know, I
think I told you this story once before, so I'm going to
bore you with the story. People say they are either hunters
or farmers in the business world. A farmer is somebody like
me who plows the furrows and gets a minor retainer for doing
something. A hunter is the guy who goes out and looks at
one big project. He may chase the big project for three
years before he brings it in.

Mr. Hakim is a hunter; I'm a farmer.
I can see that this big project at Abadan wasn't
going anywhere. Every day Abadan was being more and more
destroyed. So I said, "Look, Albert, this isn't going
anywhere . "

Q This field is barren for now and come back later?
A It was just not going anywhere.

IMW

mmm

Q All right. And he discontinued his payments to
Razmara around the same time, I take it?

A Yes. As far as I can remember; yes.

Q Did Razmara remain with you?

A Yes. Razmara has remained with ite, aid we've had
different kinds of relationships. For instance, he is a
shareholder in TGS International.

Q When did he become a shareholder?

A In this documents. Look it up. I mean, I don't
remember all these dates.

Q Sure. I just wanted to know whether it was
before or after.

A It was after, at some point when we were involved
in operations in Kuwait.

Q Returning our focus to Hakim, have you had any
other relationships with Hakim?

A Yes. I think over the years.

Q When was the next contact you had with Hakim from
the beginning of your risk assessment program?

In other words, branching off from there, what
others were there from that point forward?

MR. MC KAY: I don't understand the question.

mtmsB

!^ imuLA

m- "

THE WITNESS: No, I don't either. I just told you.

BY MR. HOLMES :
Q There's a period of time toward the end of 1980
until the end of '82 or the beginning of '82, when you're
working with Hakim on risk analysis; correct?
A Uh-huh.

Q I don't you to start after the end of that

relationship; I want you to start after the beginning of that
relationship and tell me what's the very next contact, other
than that relationship, that you had with Hakim.

MR. MC KAY: In the time frame when he was doing
the risk analysis, what else was he talking to Hakim about?
MR. HOLMES: Yes. Do you understand that?
THE WITNESS: No, I don't.

MR. MC KAY: He's taking that time frame when
you're doing the Iranian-Iraqi War analysis and asking if
you had other business dealings with Hakim.

THE WITNESS: No, I don't think I had any other
business with him.

BY MR. HOLMES:
Q I don't want to be quite that specific, because
in the world of a hunter, business is sometimes defined as

mmvm

UNWSIFfED

•72

something that brings in money, but my interest is in any
Ij kind of discussions at all that may have been with Hakim, in

the hopes of bringing in money or even in the hopes of
maybe further contract.

A I don't know what specifically you're searching
for. Obviously, you're searching for something.

Q I'm just on scan at the moment.

A I did risk analysis. The next thing that I can
remember, and I can't pin it down to a specific date, and so"
forth, is that I had some discussions with Hakim about
modular storage equipment, sale of modular storage equipment,
where that could be done.

Q Was there any particular country discussed in
regard to modular storage?

A There were several countries discussed at one
time, and there is some correspondence in there with him in
the TGS files on modular storage. For Egypt, I think I may
have talked to him about modular storage. I don't have any
correspondence that I can recall, but I may have talked to
him about modular storage for places like the United Arab
Emirates. Maybe some other customers in the Middle East
that I can't recall at this particular point in time.

mssm

mmm

Q All right. And nothing actually was built as a
result of these?

A Nothing was built. We got no contracts out of
any of that.

Q Did this relate in any way to Marwais?

A No. This was Stanley Vidmar. Modular storage.
The Marwais thing doesn't appear until much later.

Q Let's move forward.

A He was involved -- Hakim was involved in Korea.
He was doing some projects in Korea. He was a subcontractor
on a Westinghouse contract for a nuclear power plant, I think,
in Korea.

Q What was the business opportunity that was
discussed with you?

A Analysis of what kind of security systems should
be put in there.

Q So you were assisting his subcontracting role?

A I didn't actually assist him. I talked to him
about it. I think I looked -- may have looked at some of
the specs, but I never really worked on the project.

Q Were you ever paid or reimbursed expenses?

A No, not that I recall. I have no memory of that.

nmm

« ,oo,nt ,

I don't recall ever being involved with him. You know, I
talked with him about it. We looked at it.

Q Did you ever travel to Korea?

A No. I have been to Korea but not with Mr. Hakim.
I mean, when I was in the government, you know, 1 traveled
to Korea.

Q In addition to the Korea — approximately when
was the Korea?

A I don't know. He had several projects in Korea. ,
I^ow we talked to him. And I can't put, you know, a date
on these. It's very hard to put dates on these things. He
had the power plant thing he was looking at, and I know that
I tried to talk him into a modular storage package for
Korean Airlines and some helicopters, and so forth, that
the Koreans were going to build. Nothing came of that.

Q The Koreans were going to build helicopters?

A Assemble maybe is a better word. Assemble, put
together.

Q What kind of helicopters?

A I don't remember which company it was. There's
additional correspondence in there. It's in the files.

Q In the TGS file?

UNaiSMD

UNeassiFe

A Yes.

Q Go ahead with your narrative.

A I'm just trying to think what else in Korea.
Oh. There was a — at one time, I corresponded with him and
talked to him about a radar project for Trinidad and Tobago.

Q Let's start at the beginning of that.

What was your first inkling that there was such a
thing as a radar project for Trinidad and Tobago?

A Bill Colby called me up on the telephone. As you.
know, Bill Colby is the former director of the CIA.

Q I know .

A He's somebody that I knew. He frequently calls
me and others • And told me that he was talking to a fellow
from -- he was talking to a guy who had a project in
Trinidad and Tobago.

Q A U.S. person?

A Well, I don't remember what he said at that time.
As I recall the way that unfolded, it turned out that this
was a black American who was resident in the United States.
He lived somewhere in Maryland. I didn't basically handle
much of the day-to-day activities. Somebody else in my
office talked with him. We defined the project, what it was

wMm

UNaiiSSlKD

that Trinidad and Tobago was looking for, and we raised that
i| with Mr. Hakim to see if he could find the radar that was
responsive.

Q Are there any documents in either of these
exhibits, 6 and 7?

A I don't know. I think that probably took place
before 1982.

Q All right. Who is the black American?

A I don't remember the guy's name. I can look it
up. I'm sure we've got it somewhere. We can find it.

Q He was doing some other project on Trinidad and
Tobago?

A Yes. He was doing something else, and I don't
remember what his business was. I don't know. Maybe I met
him once. Shook hands with him, and as I said, somebody else
in the office handled that particular project.

Q All right. Then you contacted Hakim about it?

A Right .

Q Was anybody else there at that contact?

A No. Not that I recall.

Q Nobody from Hakim's companies?

A There was a fellow that we corresponded with

mumm

uNiwe

in Hakim's company, because somebody in the newspaper business
' was asking me names of various people that I know. Did I

I know this guy, did I know that fellow? And I didn't even
recognize the name, but I finally remembered it was a fellow
by the nsime — I think his name is Niedhart, or something
like that, who worked for Hakim.
Q In California?

A Yes. He was the fellow we corresponded with,
maybe we talked to him on the telephone about this particular
project.

Q Now describe the project.

What was it that they wanted?
A They wanted a radar system, something for
coastal defense kind of activity.

Q What was Hakim's response to your description of
what was needed?

A He went into the market and was looking for a
system, and I think he found a system. I think that was
conveyed to the individual.
Q The Marylander?

A Yes. And nothing ever happened.
Q Where did Hakim find the system?

\mm\i^

UNCElSSSfFIfO

A I have no idea.

Q Do you know whether he accessed any CIA-related
technical people in order to discover the system?

A No, I don't think so. My memory of that was,
whoever this fellow was who was working for him found the
system, and it was available on the market, but how he
found it, where he found it, who manufactured it, and so
forth, I don't have any of those details in my memory.

Q Okay. You say this is sometime prior to 1982?

A Yes. That's my recollection.

Q Can you give me a better read than that?

A No, I can't; no.

Q Is this after September of, what is it, '79?

A It has to be after September of '79, after I
retired, but I can't put that into any —

Q Did you have TGS up and running at that time?
MR. MC KAY: At the time of the conversations
about Trinidad and Tobago?

MR. HOLMES: Yes.

THE WITNESS: I don't know. I probably did,
because the fellow who handled that has worked with me
primarily in TGS.

umssw

4H /* « J**^ r' !*"1 79

irjli)

BY MR. HOLMES:

Q Who was the fellow? '

A A fellow by the name of Gillespie.

Q That's Vernon Gillespie, the person who his name's
in the record?

A Right.

Q Okay. In addition to the radar venture, what other
relationships with Hakim?

A I C2m't think of any. Iran-Iraq War, modular
storage. Korea. You know, at the moment, nothing else comes
to me. I mean, what I have since '82 is in there, but I
can't think of anything else, you know, other than what's
been discussed here.

Q Now Hakim, at one point, formed STTGI . Have you
or any of of your corporate firms or people associated with
those corporations dealt with STTGI?

A No. I think — no. He's talked to me about his
concept. That came into being — that idea came into being
after there was some law passed a number of years ago about
benefits in having U.S. trading companies or conglomerates
that could have certain benefits of being able to put
together certain packages. So I heard him talk about that

KlWtB

subject.

Q Prior to the STTGI , I noticed in your records,
there's a company that he '/as dealing as called Triangle.

A Right.

Q Who was Triangle?

A Let me go back to try to answer that. My
relationship with Hakim sort of unfolded like this. I
dealt with Hakim in person, and in some of the early days,
when I was doing risk analysis work for him, I was paid by
Hakim, the person, later. The billings were sent to
Triangle. He asked that the billings be sent to Triangle
Associates, and we were paid by Triangle Associates. I
don't know the corporate genealogy. That was a corporation
that he was involved in. Then later at the end of our
relationship, we were billing to Stanford Technology.

Q Stanford Technology or Stanford Technology Trading
Group International, Inc.?

A No. Stanford Technology Corporation, STC.

Q California?

A Yes. His offices were in California. His
residence, I think, was Los Gatos , but his office was
somewhere in another little town somewhere, at least at the

a A 81

time.

Q So it was the California STC, not to be confused
with STTGI?

A Yes .

Q All right.

There came a time when Hakim, as we now know from
his testimony, was involved with Iranians, in particular,
a man named Ghorbanifar. You had had contact with
Ghorbanifar, in the meantime, in November 1984?

A Uh-huh.

Q I notice that in the file, you had a memorandum
to the file detailing your meeting with Ghorbanifar in '84,
and although you'll probably be questioned about it by one
of the other lawyers later, and I'll skip over it for
that reason now, I'm just drawing your attention in on
Ghorbanifar and Hakim.

From the time that you meSj)L Ghorbanifar in '84,
did you talk with Ghorbanifar about Hakim or Secord at any
time after that?

A No, I did not. I had no meetings with
Ghorbanifar. I personally only met him the one time in
Hamburg. So I met him, I came back to the states, turned

ta^P

in my report to the State Department, and X never met with
Ghorbanifar after that. So I never had any basis for
talking to him.

As a matter of fact, I don't ever recall even
talking to him after that, although Razmara had a slight
difference of opinion on that. He says that one time he
was talking on the phone to Ghorbanifar. I walked into
Mr. Razmara 's office, and he said, "Hey, this guy is on the
phone. Why don't you say hello?" So I said, "Hello, how
are you. Goodbye."

And that is the only other time I've talked to him.
I don't even remember that, but Mr. Razmara says that's
what happened, and 1 have no reason to doubt it.

Q From that time period — just put the time
period in your mind from the end of 1984 forward, have you
had any contact with Hakim or Secord?

A Yes.

Q Let's just concentrate on Hakim. I shouldn't
really mention Secord. The two were together during that
period of time, so I thought maybe that would help key your
memory, and just concentrate on Hakim.

A I don't remember meeting Hakim until — I don't

BHWSIfO

UNKSIflE

have any memory of meeting him until the Miami lawsuit
appeared.

Q And that was sometime early in 1985?
A No.

MR. MC KAY: May of '86.

THE WITNESS: You know, you're jumping around a
lot of dates here. Let's slow down for a minute and let me
get this.

Okay- My memory of the lawsuit is May of 1986.

MR. MC KAY: That's correct.

THE WITNESS: May of 1986, the lawsuit appeared.
All right. After that —

BY MR. HOLMES:
Q When the lawsuit appeared, did it come to you as
a bolt from the blue, when the complaint was filed, or had
you been aware that something was brewing prior to the
complaint being filed?

A I had absolutely no idea, nothing. For instance,
my first knowledge of the lawsuit was, one of my associates
picked it up on the wire service, and I had never had any
conversations, I didn't even know Avirglfan or Honey. I
never heard of Danny Sheehan, never heard of the Christie

lEtl^W

m&mm

Institute, never knew that there was a law case.

Q You hadn't heard from a former CIA friend or
something like that, that the Christie Institute was looking
into the contra situation or anything like that?

A No . I maintain very few contacts.

Q So that gives us a fairly specific reference.

A I don't remember any conversations between, say,
November of '84 and that period with Hakim, meeting with
him or anything else, until the lawsuit appeared. That
appeared in May 1986. Sometime shortly after that I had a
meeting with Hakim, and I think I tracked him down somewhere.
He was in Washington. I had lunch with him. I talked to
him about the lawsuit.

Q Was anybody else there?

A No. I don't recall anybody else being present.

Q What was said?

THE WITNESS: Can we take a short break?
MR. HOLMES: As a matter of fact, i'ts 12:15. Do
you want to recess now for lunch and come back?
MR. MC KAY: That's fine.

(Whereupon, at 12:15 p.m., the taking of the
deposition was recessed to reconvene at 1:30 p.m., this same
day. )

mmmvn

AFTERNOON SESSION

(1:30 p.m.)
Whereupon,

THEODORE G. SHACKLEY
resumed the stand and, having been previously duly sworn,
was examined and testified further as follows:
EXAMINATION (Continued)
BY MR. HOLMES:
Q Mr. Shac)cley, as I recall, when we broke for
lunch, I had just asked you what the content of the meeting
was that you had described between yourself and Mr. Hakim
in approximately May 1986.

A That meeting had to be in about June of 1986, I
told you.

Q Sometime shortly after the filing of the lawsuit
by the Christie Institute?

A The Miami lawsuit came out in May. My guess is it
would be shortly thereafter, in June 1986,
Q Good enough .

A I contacted Mr. Hakim, had lunch with him, asked
him about the Miami lawsuit, what do you know about it.
Q Was Hakim a defendant in that lawsuit?

\0M^^^

mmtwm

A Yes. He's a defendant. Yes.

Q Was he a defendant at that time?

A Yes.

Q Has there been a growing list of defendants?

A It started off with 30. It's now down to 29.

Q In any event, what was said back and forth
between you and Mr. Hakim?

A I, basically, asked him what he knew about the
case, because it was a mystery to me.

Q What did he say?

A He said that he saw no understanding, had no
understanding of why I was in the case and, basically, felt
that he was in the case sort of by guilt by association,
because he knew a number of the other people.

Q Did he tell you anything about what he knew about
what was going on in Central America?

A No. We focused exclusively on this case, and he
said he was going to look at it, and that was it.

Q You didn't ask him if there's something going
on in Central America you ought to know about?

A No . I focused exclusively on the law case, you
know, who are these guys? What do you know about the

UH6l^SI5B

uHwra

Christie Institute? What do you know about Sheehan? What
do you know about Avirg<^n? What do you know about Honey?

Q He said he didn't know anything?

A No. He said he didn't know any of those people.
I asked, "What do you know about Lipenko?" "I
don't know."

Q And to your recollection, it was just you and
Hakim?

A Yes; to the best of my recollection, that's all
there was .

Q Did you memorialize that conversation?

A If I did —

MR. MC KAY: I think it was memorialized. I
think it is in one of the documents that was described as
not being produced.

TOE WITOESS: It's in our sort of investigation that \« did
in relationship to the case.
BY MR. HOLMES:

Q And your next contact with Hakim, relating to

Hakim? '

A I don't think I've seen him. We had a conference

call, Mr. McKay, myself and his lawyer and Mr. Hakim.

HSaASSW

msmm

MR. MC KAY: I think that material is privileged.

MR. HOLMES: I have no problem with that.

MR. MC KAY: You don't need to answer further,
unless you want to say —

MR. HOLMES: Obviously, it's an attorney-client
privilege. When I say I don't have a problem, I mean I
don't have a problem with you not answering.

THE WITNESS: At some point not too long ago, I
was in the office fairly early in the morning. The phone
was ringing. Nobody was around. I picked it up. The voice
on the other end of the point was looking for Mr. Razmara.
I said, "He's not here. Can I take a message." And it
turned out to be Hakim. He said, "What are you doing
answering the phones?" And I said, "Well, I'm the first one
here, answering the phones." And he left a message for
Razmara. You know, it was a very brief telephone exchange.

BY MR. HOLMES:
Q Okay. I want to ask you kind of a general
question.

As Hakim has testified, there were efforts made
by Hakim and others, including Secord and people acting for
STTGI , to establish business connections, commercial

relationships in Iran, in the 1985-86 period of time. That's
come to be known as the First Channel Ghorbanifar and the
Second Channel. I would like to know if you heard or know
anything about those efforts by Hakim and his associates?

A No, I do not. I know nothing about them.

Q So although he was dealing or planning to deal
in commodities that ostensibly or presumably would have
involved countertrade, you and your associates didn't hear
anything about that happening?

A No. The only other conversation I had with him, -
and we met briefly, was on Marwais.

Q Let's go back into Marwais and explain that. I
gather that what you are keying on there, is that that was
a countertrade type arrangement?

A Right.

Q Go ahead and explain that arrangement.

A It's"very simple. Marwais was being represented,
as far as I know, by Hakim and Secord in the UA£.

Q You're dealings with Marwais were limited only
to the UAE?

A I never dealt with Marwais. I dealt with
Hakim and Secord.

tttmsro

H»!ssro

Q And were your dealings with Hakim and Secord in
reference to Marwais limited only to potential Marwais
business in the UAE?

A In the UAE.

Q You had nothing to do, for example, with Marwais'
i opportunities in Saudi Arabia or anyplace else?

A No.

Q Go ahead.

A That was it. They were bidding on a project in
the UAE aircraft shelters. One of the possibilities was
the UAE would pay for those aircraft shelters in an oil
barter deal, and I was asked about the oil barter, how it
worked, how it could work.

Q Who asked you about it?

A Hakim and Secord.

Q When did this occur?

A I can't pin that down with precision, but I think

i
there's a file in here somewhere.

(A pause.) i

Q So we're looking at a portion of Exhibit No. 6 j

that consists of a manila file folder entitled Marwais/UAE J

Oil Barter Folder, Research Associates International. i

A Okay. It shows — here's a memo 1 February '85.
I talked with Mr. Hakim about a UAE oil barter
deal.

Q Did you reach some kind of agreement with Hakim?

A No. 1 didn't reach any agreement. We just
discussed, back and forth, what if. There was never a firm
proposal. In other words, what if they got the contract,
what if oil became a part of the price?

Q What was the understanding between you and he, as
to what would happen, if they did get the contract?

A Could I help him structure the deal, if it became
a firm requirement, that is, for somebody to lift the oil
to generate funds by lifting the oil. And I said yes.
But it never came to that. They never got the contract.

Q Why don't you explain for the record and for
the people who may read this someday, in the dust of some
archive, what a countertrade, oil barter deal looks like?
MR. MC KAY: Generically?
MR. HOLMES: Generically, just so it's
understood. I think I understand it, and obviously, you
do. I'd like for the reader to understand it.

THE WITNESS: The country that wants to have a |
project built, in this case, the UAE, signs a contract with

f~ ^

Builder Marwais. All right. Then part of that is arranged
with the UAE , whatever entity it is in the UAE that's doing
this, let's say, the Ministry of Defense, would arrange with
the Ministry of Petroleum to lift a certain amount of oil.
That oil would go to an oil company, and that oil company
would then take and sell the crude and then deposit those
funds into an escrow account. When those funds were in the
escrow account, then the bank would pay those funds to the
supplier of the services, in this case, Marwais, on
instruction from the country, the UAE Ministry of Defense.

Q And is the oil company obliged to perform at a
certain price, whether or not the Marwais contract is done,
or is it contingent on Marwais completing the contract?

A It depends on how the deal is structured.

Q So it may be that way and it may not be?

A Normadly, it would be, the Ministry would sell the

crude to the oil company. The oil company would sell that

crude for a fee, depending on how they negotiated. Let's

say their fee was something like 15 cents a barrel. All

1
right, the oil company would take that 15 cents a barrel as

their profit for that transaction. The remaining funds would

be put into the escrow account. At that point in time, that

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portion of the deal between the Ministry of Petroleum and the
oil company is finished. Then that escrow account is
controlled by the Ministry of Defense in the UAE, which
then issues progress payments, depending on the level of
construction, to whoever is doing the construction. In
this case, Marwais.

So it is put together in that manner, but they're
really separate transactions which come together to make a
total deal.

This financial arrangement is a very common
arrangement in Third World countries, isn't it?

A It has been a very popular arrangement in the
market, probably over the last four to five years.

MR. MC KAY: Mr. Holmes, could we identify this
person who's just come in from the House?

MR. HOLMES: Yes. This is Joe Saba from the
House.

BY MR. HOLMES:
Q When we did the chronology of Hakim up to the
June of 1986 meeting and beyond, we didn't touch on this.
A We touched on it, then we got off on something
else.

msm

Q Is there anything else we didn't touch on? Any
other relationship with Hakim that we didn't touch on, when
we gave that chronology?

A I don't think so. To the best of my knowledge,
we touched on this, and you said, no, you want to discuss it
later, and then we got off on something else.

Q Now returning to the model or the phenomena of
countertrade, this phenomena would also apply as a general
phenomena i'- Iran, as well?

A It could,

Q In particular, as Iran buys high tech items or
munitions or missiles or whatever, it is oil that they are
selling, in order to raise those funds?

A Yes. In the Iranian economy, oil is the largest
producer of income.

Q And your job, over the past five or six years
anyway, has been keeping your thumb on the oil business in
the Middle East, of course, including Iran, where Mr. Razmara
is from?

A Uh-huh.

MR. MC KAY: I'm going to object to the question
as vague, in terms of keeping your finger on the oil business

mnm

I don't know whay that means.

j| MR. HOLMES: If you don't understand the question,

let me know.

THE WITNESS: There are 22 oil-producing countries

in the world. Okay. I monitor trends relative to those 22

oil-producing countries, and there are a couple of more

countries that are coming on stream now.

BY MR. HOLMES:

Q We know from the testimony in the hearings that
were some sizable Iranian purchases going on in 1985 and
1986 for weapons, some at least, involving the United States
and others involving other countries.

Did you gather information about the oil
countertrade in relation to those kinds of purchases in your
business?

A No. Tha*- cas not a particular requirement, you
know. I looked at the countertrade and the opportunities
rather than collecting information numerically about
countertrade.

Q Wouldn't an Iranian decision to buy a substantial
amout of arms requiring cash payments be something that
would cause a blip in their oil trading posture?

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I A It might, but that's not the way you monitor

j Iranian oil production, is by backing into it through

j whatever sales or buys they might be making. In other

words, you monitor Iranian oil production on the basis of

output. You know, tanker liftings, and so forth.

Q In any event, did you hear from any source,
about Iranian desires to buy missiles in 1985 or 1986?

A I think the general conversation, you know, that
the Iranians were interested in buying all kinds of
equipment, including missiles, I wasn't specifically
involved in any such action.

Q Well, I'm not suggesting that you were. I just
wanted to know what the sources were out there.

A Well, it's in the newspapers. I mean, this kind
of stuff is in the newspapers.

Q Did you have anything more direct than newspaper
reports on that subject during that period of time?

A No. There's a file in here where I tried to
arrange a processing agreement between ^V client and
Portugal, in which Portugal would buy Iranian crude.

Q Could you explain that? I'm sorry. You lost me
on the processing arrangement.

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A Okay. A processing agreement, you have to have
a refinery. In this case, Portugal has a refinery.
Portugal also buys crude for its own account. Portugal buys
from Iran. It is not unusual in the oil business for someone
to make a processing agreement. They, in effect, will buy
barrels of product that come out of that refinery, not the
crude, the product. In other words, here — •

MR. MC KAY: I think we understand.
BY MR. HOLMES:

Q So your client, in this situation is not using
its own refinery in the United States. He's buying the
product of a Portuguese refinery?

A Right.

Q And it is the Portuguese who are doing the
processing?

A The Portuguese are doing the processing, for
which they get a fee.

Q So it's certainly logical to assume that what

we're looking at is very much like this Marwais, United

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Arab Emirates deal, in which the oil being processed in
Portugal is countertrade]!

A It's not a countertrade deal. It's an entirely
different kind of a deal.

Q Well, it's a payment deal.

A No. Iran produces crude. Iran sells crude to
the Portuguese. The Portuguese had a fixed period of time
within which to pay for that crude.

All right, let's just arbitrarily, because it
has to be negotiated, let's say it's 45 days. In that 45-
day period that Portuguese refinery takes that and turns
that into whatever it's supposed to turn that into -- diesel,
motor fuel, whatever, and it sells that to somebody who
then sells it into a European distribution mechanism. So
you've got cash flowing throughout this whole mechanism.

Now what the Iranians get paid for or what the
funds that the Iranians get paid for their oil, they do with
that whatever they want. It's not linked to anything
specific.

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Q Did you ever discuss with Hakim or anybody
associated with Hakim any opportunity relating to medical
supplies?

A No, I have no recollection of ever talking to
Hakim about medical supplies.

Q Have you ever had any discussions relating to
medical supplies being sold to Iran?

A No. I don't recall medical supplies.

Q Not necessarily associated with Hakim, you
understand.

A No. I have no recollection of any medical
supplies being discussed with me, selling them to Iran.

Q Have you or anybody associated with the companies
that you've been associated with dealt in medical supplies?

A Yes. We have recently been talking with Kuwait
on medical supplies. We've been talking with a company,
an American company here in Roslyn in the last couple
months on medical supplies for the Saudi market.

Q But to your knowledge, none of those medical '

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supplies are destined to go to Iran by any trade arrangement?

A Not that I know of.

|| Q And nobody associated with Hakim in any way has

I spoken to you or anybody associated with the companies that

|! you're associated with about trade opportunities in Iran

in 1985 or 1986?

A I recall no conversations on trade activities
in Iran.

Q Were you surprised to hear that Hakim was
involved in developing trade activities into Iran?

A Yes.

Q When did you first become aware of it?

A Whenever it appeared on television.

Q No prior inkling? No discussion with anybody
about it?

A I don't have any recollection of that.

Q Let me broaden my previous question.

You and he have mutual acquaintances. You and

Secord have mutual acquaintances. You and a number of ;

i
other people who are likely to be in the know on the

Iranian deals have mutual acquaintances like, for example, '

i
North or other people in the government. None of those ■

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mutual acquaintances alerted you to the existence of the
so-called "Iranian Initiative" up until the time it was
publicly disclosed on television?

A I have no kqnowledge of that, and I don't see
any reason why I would have any.

Q Well, as a ''(^bresentative of an Iranian-
specializing oil trader, it would certainly seem like a
possibility.

MR. MC KAY: Who says he's an Iranian- .'

specializing oil trader?

MR. HOLMES: Mr. Shackley has said he
specializes in the Near East and Razraara's from Iran;
his ma^or client, John Dois, is the oil trader.

MR. MC KAY: I don't understand where the
Iranian specialization comes. I think that's not in
anything he's testified to. He's testified on all 22
markets.

MR. HOLMES: No, no. He asked me, inferentially ,
why I was asking the question, that's all.

MR. MC KAY: Are you referring to Razmara then? j

MR. HOLMES: No , no .

MR. MC KAY: I thought you said a person

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specializing in the Iranian oil trade.

MR. HOLMES: Oh, no. Okay. No, I didn't mean
that.

THE WITNESS: I don't specialize in the Iranian
oil trade.

MR. MC KAY: Maybe he didn't say that.

THE WITNESS: Well, that's what I thought —
that's what I thought you said.

MR. HOLMES: Okay. I didn't mean it that way.

THE WITNESS: I don't specialize — in other
words, I monitor the oil trade per se, and the 22 oil-
producing countries within those, probably the 13 countries
in OPEC.

BY MR. HOLMES:
Q Wouldn't it be logical, knowing the Middle
Eastern market and particularly its petroleum component as
you do, to assume that Hakim's group would have been in
touch with some countertrader, in order to provide the
other side of their trade opportunities in Iran, in other
words, to generate the cash that the Iranians would need
to buy missiles and medical supplies and whatever else it
was that Hakim was hoping to sell in Iran?

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A NO, I don't think that necessarily follows. I
mean, the Iranians have been in the oil market for a long
time, and they've got a lot of people scattered all over
Europe who can put these deals together for them. They're
constantly out there marketing various and sundry things.
If what you're trying to say is that there's got to be this
big mechanism that comes down this way toward a Hakim oi
somebody like him, and you're on the wrong wicket —

Q I'm not sure I understood, what you mean —

a big mechanism.

A In other words, if you take the total National
Iranian Oil Company, which is a large structure, and they
have representatives in a lot of countries -- for instance,
they have an office in London that markets - so these guys
are out marketing, and they have an established mechanism
for marketing. They are selling crude to the same people
they've been selling crude to for years.

Q Of course, the same could be said about the
United Arab Emirates, couldn't it?

A NO. Not really, because the UAE production has |
increased in recent years. They've got more crude to deal •
with than they have had in the past, so they're looking for

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new customers.

If you look, historically, at Iranian production,
it's come down.

Q So although it would be reasonable to assume they
might have, it's certainly not necessary that they would
have. That's the point you're making?

A Yes. I'm making the point that they've got a
big marketing mechanism, and if you're looking at there's
got to be sort of one guy, then I'm saying that I think
you're off on the wrong wicket, that there is no one
instrumentality that handles their large marketing.

Q I understand what you're saying.

Let's return to Mr. Secord, the second
principal, and start as we did with Hakim at the beginning
and go forward in time.

When did you first know or know of Mr . Secord?

A I first met Secord in Laos, when we were both
in the government.

Q The time frame?

A I was in Laos in '66 to '68. \

Q Was he there the entire time you were there?

A I have no way of reconstructing that. He and I

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worked together -n Laos. That's all I can tell you

Q All right. Where, after Laos, did you have any
contact with Secord?

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A I don't know. Maybe when I'd come back. When
I'd come back from overseas, if he were here in the country,
at large parties, a get-together, he'd be at some of these
parties. But I don't have any specific date. I mean, I
can't say, tell me that you met him on the tenth, of whatever,
I just mean generically.

Q For a period of years, you had no professional
contact with them then?

A NO.

Q When was the first business or, hopefully, business
contact you had with Secord?

A I saw him after he retired, and m. don't know when
he retired.

Q Let's assume he retired in May of 1983.

A Then somewhere in that period, shortly after he
retired, I started talking with him about business. And the
only specific things that I remember discussing with him in
the business sense, is the Marwais activity that he was

involved in in the UAE. I think on one occasion he talked

i
1

to me about some possibility of an oil concession or ;
something in the Sudan.

Q The Marwais thing was the same opportunity that ■

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we've talked about with Hakim?

A Right.

Q What was the oil concession in Sudan about? Tell
me about that.

A There's not much to tell. He was aware of the
fact that there was a concession there and raised this with
me, because he felt that he had some ability to help open
a dialogue on that particular concession.

Q I'm not even really understanding what you mean
by an "oil concession available." You mean the government
of Sudan is holding itself out as available to grant some
kind of a lease for developing oil reserves?

A There are all sorts of combinations. I mean, I
don't think I'm here to give you an education in the oil
business today, but in its simplest terms, somebody may have
a block of land that there are geological findings that
indicate that it has oil. It's a question of, can you bid
on it. How do you qualify for bidding?

Q Did you take this opportunity and discuss it
with anybody else other than Secord? '

A No, I didn't do anything with it.

Q You never even talked it over with any person in .

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the oil industry and asked them if they might be interested?

A No, because my view of the Sudan was that it was
a basket case. It was not any kind of a place that I would
want to recommend to any clients. There already had been a
large number — a lot of reasons for it — a number of
incidents in the Sudan that didn't make it worthwhile.

Q What was Secord's hope for his own role in that
oil concession?

A We never discussed it. He said, "Look, here's
something I'm aware of in the Sudan. Why don't you take a
look at it?" I looked at whatever it was. I didn't do
anything with it. That's as far as it went.

Q All right. This was approximately when?

A After he retired, and we were talking about the
Marwais activity, somewhere in that period.

Somewhere before Marwais and after his retirement?

Would you repeat that?

Was it before the Marwais discussions or

Q
after?

A It was probably after the Marwais or at the same j
time as the Marwais discussions.

Q Okay. From that time forward, when was your next

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contact with Secord?

A I don't have any real memory of any contacts
with him, until I went in the hospital,

I remember he stopped by to see me at the
hospital. That's the next time I remember seeing him.

Q Are you talking about late in 1986, then?

A I was in the hospital in October of 1986.

Q Was there anybody else there when you dropped
by?

A I had just had a major operation. All I remembet
is various people ccming in. I don't remember who was there
and who wasn't there.

Q So the conversation you had with him then was
more or less moral support, hope you get better soon.

here?

Are you alive.

He didn't come there with a big proposal, sign

No.

Did he have any proposal at all?

All I remember is talking to the guy. That's
all I remember. I mean, I know he was one of several,
many people who came to see me while I was in the hospital.

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Q After that, when was your next contact?

A My next contact with him was after the Miami
lawsuit. The Miami lawsuit was before that. June, May.
Let's back up. Back up. I stand corrected.

I saw him when the Miami lawsuit came out. I had
a conversation with him in June of '86. I went in the
hospital in October of '86.

Q All right. Now —

A I'm getting mixed up on these dates and this
jumping around here from the 1960s to 1980.

Q I thought we had done a remarkable job in
covering the ground on this one.

All right. It's June of 1986. You've been
served with the Avirfanwi and Honey lawsuit. You met with
Secord?

A Yes, I did.

Q Was anyone else present?

A I don't think so. I don't recall anyone else
being present.

Q Was there only the one meeting? j

A No. I had a meeting with him, and let's see, I '
think you were out of town. It was shortly thereafter that;

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I met with him and his attorney. That is, I met with
Secord and Secord's attorney.

Q Who is his attorney?

A It's Mr. Green.

Q Guys can have more than one attorney.

In your first meeting with him, what was said
between the two of you?

A It was the same kind of conversation that I had
with everybody at that time, you know, what do you know?
Q Who did you talk to about the lawsuit in that
period of time?

A Let's see. I talked to Secord, Hakim, Singlaub.
On the telephone, I talked to Andy Messing. I don't know.
There may be somebody else. Those are the ones that stick
out in my mind at this particular point in time.

Q You were trying to find out what was going on.
A Yes. I was trying to find out, you know, what
this consisted of.

Q What did Secord say?

A Secord told me that he knew some of the people
in that suit, that he was going to be discussing it with •
his attorney. He'd just found out about this case, shortly'

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prior to niy having learned about it, and why don't I come
over and sit in on that meeting. I had the impression from
that that he knew some of these players that had been
involved in Central America, but I didn't know the nature
of his involvement.

Q Did he come to tell you the general nature of
his involvement?

A No, he didn't.

Q Did he tell you that he was withdrawing from his"
direct involvement in the contra resupply?

A No, I didn't get into that with him.

Q Did he say anything about contra resupply?

A No, he didn't say anything specific. He said he
knew some of those people that were on that particular list.

list?

Of course, you knew some of the people on the

Very few.

You knew Quintero and Chavez, Clines, Secord,

Q
Singlaub?

A Yes. Those.

But I didn't know and still don't know people
like Hull, for instance. Owen. The first time I saw him.

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I thought maybe this was the fellow who used to work in the
Agency, but it isn't.

I established who he was, and there are a lot of
people on that list that I don't know.

Q What I'm getting at is the fact that he knew some
of these people was perfectly obvious to you at the time.
He didn't have to tell you that. You know that he knew
those people .

A But there's a big difference between knowing
people like, let's say, Singlaub, whom we knew in the military
service, as opposed to being involved in a lawsuit with all
these guys. What are these guys doing in this lawsuit?

Q That's exactly what my question is.

A What do you know about the Christie Institute?

Q He must have told you a lot more than "I know
some of those people."

What did he tell you eOxsut what the facts were?

A No. He simply told me that he knew a number of
th««e people, that he 'a been active in Central America.
He was going to be discussing this with his particular •
lawyer, and Mr. McKay was out of town at that particular ■
point in time. This was, I think, in June. I was very

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agitated by this particular suit, and I decided I'd go to
that particular meeting, and I did.

Q Did you memorialize your conversation, your first
conversation with Secord and your later conversations with
Secord?

A Yes. I think those are covered.
Q What other memoranda are covered in the letter
with regard to the Avirg^n lawsuit? Just so we'll have a
catalog of what's not being produced for that reason.

MR. MC KAY: I ' 11 be glad to give you a list
by separate mailing and go into it more completely. I could
have done that and probably should have done that. I can do
it very easily by getting the names.

MR. HOLMES: Can we agree to have that on Monday?
MR. MC KAY: Yes.
BY MR. HOLMES:
Q All right. Did those discussions about the
lawsuit continue, or were those the only two?

A Those, basically, were the only two. Recently,
I've had a meeting with him and his lawyer, Mr. McKay and
myself.

MR. MC KAY: About the lawsuit.

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BY MR. HOLMES:

Q Other than the lawsuit, have you had any contact
with Secord or discussions with Secord in 1985 or 1986,
except for, I guess, the Marwais and the Sudan thing were
before that.

So without further exception, any other
conversations with Secord in '85 of '86?

A The only things that I recall over the last
couple of years, and I can't pin it down with precision,
the only business that I recall talking with him about is

Marwais and the Sudan. And the next thing that is in my

I
memory bank relative to Secord is the Christie institute

lawsuit.

Q Did you or anybody associated with the companies
that you're involved with, like PGS or RAI , receive any
inquiries from Secord or relating to Secord about the
possible support for any military activity in Central
America?

A No.

Q No requests for, say, a list of names of people '
involved in security? People involved in air supply,
air transport? Nothing like that?

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A NO.

Q I want to go back and start with Mr. Clines,
the same process.

You met Mr. Clines, as I recall, in connection
with Miami?

A No. I think I met Mr. Clines ^^^^^^■■xn the
'50s. I just have a vague recollection.

Q Is this in relation to the CIA?
A Yes. Then my next memory of him is|
was there when I arrived.

my memory is that he was still there.

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A To the best of my recollection, because he was
there when I arrived, he was there when I left.

Q Would it fair to say that you became friends
during those years?

A Yes. You know, I had a lot to do with him, and
we all had an esprit de corps comradeship, and so forth.

Q So from that point forward, you would have one
branch of your relationship with Clines as a general
friendship contact throughout those years, social meetings
and that sort of thing?

A Yes; right.

Q When was your next contact with Clines,
'And I mean to exclude now the totally innocuous
type of social contact, in order to concentrate on business

type contacts.

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A My next memory is that he appeared m Laos,
probably in '67, but I can't be more specific than that.

Q His duties in Laos brought him together with

Secord as well?

A I'm sorry. You'll have to repeat that.

Q His duties in Laos brought him together with

Secord as well as yourself?

Q How long were you and he there together?

A I can tell you when I was there. I arrived in
'66, and I left in late '68. I don't know when he came.
As I say, he may have come in '67, and he was still there
when I left.

Q All right.

And your next contact with him?

A My next contact with him, I think, is probably
about, probably '73, maybe late '72. '72, '73.

Q What did that consist of?

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A That consisted of his coming to a Washington
to with^^^^^^^^^^^^^HH^s
leaving]HH||H|H^^^^^^H|^s ^^ ^^^

from somewhere like the Naval War College or something.
What phase of H^^^^^^^^^^^^^H was
A What do you mean, "what phase"?

Was ^^^^^^^^^^^^^^^^^H ^
A Yes. It's the geographical entity that's

responsible ^°^^^|^H^^^^IH

Q So it was like a bureau or division:

A A division; yes.

Q And he was taking over for who? He was taking the
job that you were leaving?

A No. I was leaving as the head of that unit. I
think he was coming in to be about at some job four or five
echelons below that. I don't know what job he had there,
but I remember I was going out as he was coming in.

Q For a brief while he was working for you then?

A Maybe very briefly. If he did, it was very brief.

Q Go ahead. What was your next contact?

A From that point on, we were both — let's see.
Whatever that was, it was '73. From that point on, we were •

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both in the Washington area.

Q Yes. Do you mean by that that you had fairly
regular social contact with him?

A I would see him occasionally for lunch, and so
forth.

Q Did you ever have any financial transactions
with Mr. Clines?

A Yes . At one time we owned a rental piece of
property in McLean together.

Q When was that?

A I can't reconstruct those dates. Probably in the
'70s sometime, the late '70s.

Q Is that the only financial relationship you've
ever had with Clines?

A Yes.

Q Will you describe the rental property?

A What is there to say? It's a rental property.
We bought a piece of property. We rented it out. Eventually,
we had to pay it off, and when it came time to refinance it,
he bought me out.

Q You bought the property together? You each put
in some money on it?

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A I think the transaction was Clines and my wife.
At that time, I was trying to create some investment properties
that my wife could manage, and so forth, but I never got very
far with it.

Q Clines, at this point in time, was dealing in
real estate while he was at the CIA, with the knowledge of the
CIA; is that right?

A Right.

Q Where did the money come from that you and he J
invested?

A I don't know where his money came from. My money
came from savings that I'd accumulated.

Q How much was it?

A I don't remember. I'd have to go back and
reconstruct it. I don't remember.

Q You bought the property and then made payments?

A Yes.

Q And it was a situation where the rent paid for
the payments and a little bit more? Is that the type of
deal?

A Well, it either broke even, or it was a slight
negative cash flow, $50 or $75, or whatever it was.

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Q Would it be made up on your depreciation?

A Right.

Q Then you say you paid it off. By that, you mean
that you completed your mortgage payments?

A No. There was a period of time that we were
paying mortgage payments . The people who owned the property
moved and bought another property. At the end of a fixed
years period of time, whatever it was, a couple of years, we
did have to refinance it or pay it off. So we had to pay
them off.

In order to do that, Clines bought me out. Then
he refinanced the thing. He bought me out of my share of
what we assumed the property was worth.

Q Do you know where he obtained the money for
that?

A No, I don't,

Q Is it possible that he obtained that money from
Dick Secord?

A I have no idea.

Q Did you ever discuss that house arrangement with
Dick Secord?

A No. I don't recall discussing it with Secord.

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Q Did you ever discuss it with Clines in Secord's
presence?

A No. I have no memory of that. I can't say that
I did. I can't say that I didn't. I just don't have any
memory of it.

Q Was the amount that you were paid out greater or
less than your initial investment?

A 1 made some money on that.

Q How much money? '

A I do not have any idea at this time.

MR. MC KAY: I don't think they're in there,
because it's pre- '82 document. I think we're talking about
an individual family house. We're not talking about an
apartment building or an industrial complex. We're not
talking about very much money.
BY MR. HOLMES:

Q Do you recall ever discussing this transaction
with Ed Wilson?

A No, I don't.

Q Do you know whether Ed Wilson was the source of ;
Clines' money?

A I don't. I really don't.

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Q Did Clines ever say that he was?

A No, he didn't.

Q Were you, Clines and Wilson ever together when
this deal was discussed?

A I have no memory of our being together for a
discussion of this transaction.

Q How did Clines pay you?

A With a check through a real estate attorney in
McLean.

A
check.

Q Did that check reflect the entire amount that
Clines gave you in relation to this transaction?

A Yes. That's my memory of it.

Q Did you receive any cash at all in relation to
this property at any time?

A No, I did not.

Q Let's go forward with Mr. Clines.
What was your next —

A We were both here in the Washington area.

What else is there to say? I mean, that was it

Was there only one check?

Yes. As far as I can recall, there was only one

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When did you first become aware that Clines was

] involved in Central America supply efforts?

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A I think when I got that subpoena.
Q Which subpoena?

A Not the subpoena. The Christie Institute papers.
Q Did you talk with Clines about it?
A I tried to track him down. I don't remember
talking with him. He's a very hard guy to track down.

Q You've never discussed that lawsuit with Clines?
A I don't ever recall.

MR. MC KAY: Clines was present at the meeting
with Mr. Green and Mr. Secord,Mr. Shackley and myself.
Mr. Green represented Clines.

MR. HOLMES: Was anybody else present at that
meeting?

MR. MC KAY: No.
BY MR. HOLMES:
Q Other than that occasion, you never discussed
this with Clines?

A I don't have any recollection talking with him.
Q That was the first time you found out about
Clines' role in contra supply?

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MR. MC KAY: I don't want to confuse you. The
meeting isn't the first time. It was when he got the
subpoena. He said that was the first time. We've discussed
the meeting in between.

MR. HOLMES: You don't mean the subpoena. You
mean the complaint. That was just an allegation.
THE WITNESS: The complaint.

My knowledge of this Christie Institute thing
came about when we were served papers by the Christie
Institute. He is listed in that complaint. All right?
That's when I found out.
BY MR. HOLMES:
Q That's just an allegation. I want to know when
you learned from some other source that he has something to
do with it.

You're saying that this meeting with all the
lawyers and Secord and Clines was it.

A Yes. That's my memory of it.

Q And you've never discussed it with Clines since
then?

A No. I have not talked to him since then.
Q You haven't talked to him at all since then?

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A No. I haven't talked to him.

THE WITNESS: Can we take a break here?
MR. HOLMES: Sure. Go ahead.
(Recess. )
BY MR. HOLMES:

Q Did you know where Clines was during '85 and '86?

A No.

Q You don't recall his spending time in Egypt?

A No. From time to time, people would ask me, have
you heard of him, have you seen him? We're looking for him,
and so forth, but I didn't know.

Q Let's start with Mr. Quintero. Would it be a
fair characterization of what you said already, that you
didn't know that Quinterc was involved in Central American
supply either until it became public?

A Right.

Q You hadn't heard what he was doing from any other
source?

No, I had not.

When di d you first meet Quintero?

I first met him, to the best of my recollection.

after I retired.

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Q How did you meet him?

A I was introduced to him by Mr. Clines.

Q What was the occasion?

A The occasion was discussion of the API business.

Q Who was present?

A I don't know. Come on.

Q Who was involved?

A All I remember is, I met Quintero through Clines, .
and I remember discussing the API bid procedure for selling
valves and flanges.

Q This was the same business you mentioned earlier,
involving Quintero, Finney and Chavez?

A Right.

Q From that point forward, what has your contact
with Quintero been?

A Essentially that. In other words, during the
time that I was working with API on that particular project,
I worked with Quintero on the Mexican market, valves, flanges
and so forth.

Since then, I think maybe I've seen him once or
twice in Washington at some social occasion.

Q No other business with him at all?

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When did you meet Felix Rodriguez?
I met Felix when I was in Vietnam.
And from that point, when did you deal with him

A No.

Q
again?

A I think when I came back to Washington, he retired
shortly. He had a medical disability. He retired on a
medical disability, when I was still in government.

He came up here for medical papers or something
like that. I would see him in a social context.

Q Were you still with the agency at the time?

A Yes.

Q Did you discuss his medical retirement with
anybody at the Agency?

A I remember, I think when his papers were being
processed, and so forth, I think somebody came around and
asked me what he did in Vietnam. I remember the specifics,
some of the crashes that he was involved with, and so forth.

Q Would it be giving you too much credit to credit
you with helping him get his medical disability?

A I think he got it on its merits. I mean, he was
in, I forgot how many crashes he was in. He was in two or

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three helicopter crashes and got a bad back. He applied for
medical retirement, based on the advice of the medical staff,
and then there was regular paperwork. I'm sure I was one
of several people that people came around to discuss what his
service had been in Vietnam and what was the nature of his
claim.

Q When did you speak with him again after the
medical disability conversations?

A After I retired, I continued to maintain social
contact with him.

Q Have you ever had any business contact with him?

A There are some items in here. We tried to get
him to help us open the Venezuelan market for modular storage
equipment.

Q When was that?

A Well. 1 think that was the TGS thing, if I can
find it.

(A pause.)

Q I just want to know about when it was. i

A We've been at this for a long time. We're running
around for a different lot of dates, and I simply do not
remember the date .

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MR. MC KAY: Sometime after '79.

THE WITNESS: It had to be sometime in maybe
II
!|
i; 1980 or '81. I don't know.

You keep pressing for dates, and I'm telling you,

it's in the file there.

MR. HOLMES: I'm just trying to get an idea of

where we are in time.

BY MR. HOLMES:

Q Since that time, have you had any dealings with

Mr. Rodriguez?

A Occasionally. I haven't seen him for a number

of years. Occasionally, he would come to Washington, and

I would see him when he came to Washington. He was involved

with Radio Marti, and I would see him when he came to

Washington.

I haven't seen him now in quite a while.

Q Other than, the Radio Marti contacts then, and

random social contacts, you haven't had any contact with

him since the modular storage conversations?

A I don't remember anything specific. Let's see.

(A pause. )

I knew at one time, on one of his trips that he

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was trying to go to El Salvador. He constantly was
traveling in and out of Central America.

Q Did you ever discuss the helicopter situation
with Felix Rodriguez?

MR. MC KAY: I object to that. "Helicopter
situation. "

BY MR HOLMES:

Q Some kind of business arrangement involving
helicopter parts or the sale of helicopter parts?

A He, at one timcj was involved in trying to
build a helicopter, a one-man or a two-man helicopter with
some inventor genius in Miami . I remember talking to him
about that, but at this point in time. I don't recall any
other helicopters. Wait a minute.

He talked with — helicopters. I think he
talked with a fellow who was the representative of
Augusta Bell, to try to sell helicopters to — I don't
know whether that was Guatemala or Honduras .

Q Let's see if we can flesh that out a little bit.
What was your relationship with Augusta Bell?

A I don't have any relationship with Augusta Bell.

Q Have you had any business discussions with him

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about helicopters?

A There was an Italian representative that rented
space from me for a while who, among other things, worked
on Augusta Bell helicopter sales.

Q His name was?

A Pavone.

Q He was a representative for Augusta Bell?

A Yes.

Q I don't know what his contractual relationship
was with Augusta Bell, but he represented Augusta Bell.

Q For the sale of the helicopters, I take it?

A Yes.

0 Did you ever receive any payment or expenses from
Augusta Bell for any work that you did?

A No.

Q He was simply renting space from you?

A He was renting space from me.

Q Was this in some way related to Felix Rodriguez?

A Felix talked with him about marketing, or he
talked with Felix about marketing helicopters in Central
America .

Q Was Guatemala the only country they talked about

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selling?

A What I gave you in my answer. It's either
Guatemala or Honduras. I don't remember at this point.

Q This is approximately when?

A Sometime in the '80s.

Q Do you know whether any of those conversations
Ccime to fruition in the sale of a helicopter?

A To the best of my knowledge, there was no sale
made .

Q With whom were they speaking in the Central
American countries? Do you know?

A No, I don't. I don't recall who they were in
dialogue with. They were in touch with the government, with
whatever government it was. They were in touch with the
government or somebody who had a sales commission or the
right to go out and find the helicopter or something.

Q Do you recall any conversations with anybody
about a radar device operable from a helicopter?

A No. I don't recall anything about a radar
device from a helicopter. To do what? ■

MR. MC KAY: You've answered the question.
Let him go on.

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BY MR. HOLMES:

Q I'm recalling something that you said in the
I interview I had with you back in the beginning of the year,
but I'll look it up and ask you on Monday.

So you were aware of these conversations with
Felix Rodriguez relating to Augusta Bell and the sale of
helicopters and to Central America, but you weren't
financially interested in the conversations. Is that
accurate?

A Yes. That's basically correct.

Q So if the sales had gone forward, you wouldn't
have benefited in any way from the sales?

A If the sales had gone forward, I might have then
put in a proposal for handling the logistics problem-solving
on the spare parts. In other words, how could they store
the spare parts.

Q So back in your mind, then, there was the storage
sales situation?

A Had there been a sale, but there wasn't. It
was just a discussion of the sale. It was a long way from
that to trying to plan a logistics system to go with a sale

that never took place.

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Q I understand.

When was your next contact with Felix Rodriguez?

A I recall him calling me on Christmas Day 1986.

Q What did he want to call you about?

A He said that he had just heard that I had been
sick and had had a serious operation. He wanted to know how
I was and wished me Season's Greetings. That was it.

Q At that point in time, you had already been sued;
correct?

A Right.

Q He didn ' t discuss that with you?

A I really didn't want to talk with him, to be
honest with you, at that particular point. I didn't know
what the hell he was doing. He'd been away. I hadn't seen
or heard from him for a very long period of time. I just
took the Season's Greetings and let it go at that.

Q Have you ever discussed the lawsuit with Felix
Rodriguez?

A Yes, I have. I have since discussed the lawsuit.

Q When was that?

A After his testimony here in Washington, and he
became a TV celebrity.

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Q Okay. Was there more than one discussion.'

A Yes. There 've been about two or three telephone
conversations. Two, I think.

Q Just by phone?

A By phone. He's avoided me ever since.

Q What was said about the lawsuit by Rodriguez?

A Well, I wanted to find out what he knew about
these people and wanted to discuss the lawsuit with him.
He said he didn't want to get involved. He didn't want to
be involved in discussing it or anything else.

Q So he refused to discuss it with you?

A Yes; basically. He said, "Let me consult with
somebody, and I'll get back in touch with you." Then he
left for Central America. I've never been able to catch him
since.

Q So you never discussed the substance of the
lawsuit?

A No. I discussed with him what I wanted from
him, and that's when he said no.

Q What did you tell him you wanted from him?

A I think that's part of our strategy of what I
want for the lawsuit, and I don't think that's germane to

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this.

MR. MC KAY: Generically, it was assistance in
helping to get the case dismissed, is what we were looking
for.

BY MR, HOLMES:

Q Returning to Rafael Quintero, did you discuss
the lawsuit with him?

A No. I have not discussed the lawsuit with
Quintero.

Q Never?

A Not that I recall. I have no memory of talking
to Quintero about the lawsuit.

Q I return to the list which is the appendix to
your subpoena, and I want to ask you about the Aspin brothers,
Leslie and Michael.

Have you met these folks?

A I have not.

Q You're certain?

A Yes.

Q If I were to tell you that Leslie Aspin went by ]
Leslie Allen at times, would that help you?
Do you know a Leslie Allen?

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A That doesn't ring any bells with me whatsoever.

Q I want to get into the events around November of
1984. I understand that you've written a memorandum on this,
but the Leslie Aspin aspect of that, I'm sure, wasn't in
your mind when you wrote the memo.

So I would like to ask you some specific
questions about that.

Exactly who was present at your meeting with
Ghorbanifar and where did it take place?

A The meetings with Ghorbanifar were attended by
Mr. Razmara.

Q You said "meetings" ; correct?

A Yes.

Q Let's get the first one first. Then we'll progress.

A I mean, you have to sort of look at this as a
sequence. This file in here — could we look in the file?

Q Sure.

(A pause. )

A We met on the 20th of November. During the 20th
of November we had several meetings. I think we had a
meeting with Ghorbanifar, General Manucher Hashimi — not
to be confused with Cyrus Hashimi.

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So Razmara, General Hashimi , myself and
Ghorbanifar .

Q The four of you were the people present at both
of the meetings that occurred that day?

A They were essentially — during the course of the
day there were three meetings. There was one very brief
meetino, where we were introduced. General Hashimi introduced
Mr. Razmara and me to Ghorbanifar. We did not know him.
We did not expect to meet him. He didn't expect to meet us..

MR. MC KAY: The question on the table is, who
was present at each meeting.

So just answer that. We'll get along faster.
BY MR. HOLMES:
Q Where was it?

A In the Vier Jahreszeiten Hotel in Hcunburg.
Q What led up to the meeting. How did you happen
to be in the Four Seasons Hotel?

A I cover events in the Iran-Iraq War. Mr. Razmara
helps me cover events in the Iran-Iraq War. He knew General
Hashimi- I'd been talking with him on the telephone and
exchanging views about the war over a period of time.
General Hashimi ' s views on the war were very insightful.

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accurate. Therefore, I decided that we ought to get to
understand this guy better.

On some occasion, I think it was October of '84,
General Hashimi came to the United States, to California, to
see his daughter and grandchildren. He was out there for
sometime. Mr. Razmara and I flew out there to meet hiir^, to
talk to him about the war, and so forth. We got along very
well. It's the first time I'd ever met him and got along very
well, I thought. Very interesting guy. At the end of
our discussions out there, he said th£.t he frequently met
with people from Iran. Given our interest in ".he war, he
would introduce us to sc«ne interesting people the next time
he came out, that he felt it was worthwhile to talk to. That
was the background.

He called us up in late October and said, there
are some interesting people probably coming out. Why didn't
we meet with them, and ^o forth. And we agreed to a meeting
that was postponed.

Tlien we met him in Hamburg on the morning of
the 20th, as I recall. We got there, I think, the night of
the 19th.

Q So you and Mr. Razmara traveled to Hamburg for

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the sole purpose of meeting —

A Meeting with General Hashimi, who was going to
introduce us to interesting Iranians who ware traveling in
Europe at that time and from Iran.

Q This is all on an open expense account, I gather,
with your primary client in the oil business?

A Yes.

MR. MC KAY: I don't know what you mean by

'open?"

"open. "

THE WITNESS: I don't know what you mean by

BY MR. HOLMES*

Q It's a discretionary thing for you to fly out.
You don't have to call up Dois and say, "Can I do this?" You
have the discretion to do as you please and bill him for it;
correct?

A Well, it's in the total billing.

Q You didn't have to do any actual business
transaction in Hamburg to make it worth your wiile in r
business sense. You were paid to go there and find out what I
the man had to say.

A I'm paid to know what is generally happening.

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What way is the war going to go. What's the trend forecasted,
and so forth.

Q Okay. So there's a first meeting in the morning,
and that's when you were first introduced to Ghorbanifar?

A Right.

Q Then there's a second meeting and a third meeting
all on the same day?

A Yes.

Q And are the four people that you've named the
same people who meet at the second and third meeting?

A No. In the second meeting, there is an Iranian
from Iran, who is present at the meeting.

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Q And the third meeting?

A The third meeting was in the evening.
Mr. Razmara, General Hashimi and I were staying in this
hotel, the Four Seasons Hotel, and at the end of the day,
we were sitting down to have a drink, and Mr. Ghorbanifar
came back into the hotel, and we had a drink with him.

Q But|i|H|0^BKdid not reappear ^°^ the third

meeting?

A No.

Q Did you see any Americans in Hamburg during you
stay?

A No.

Q How long did you stay in Hamburg on that
occasion?

A As I recall, we arrived on the 19th. The
meetings were on the 2 0th, and we took off on the morning
of the 21st or midday on the 21st.

Q And you say no Americans in Hamburg during those
three days, 19, 20 and 21?

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A I have no recollection. I had no discussions
with any Americans. I mean, maybe somebody was in the
lobby of the hotel, who I didn't know was American, but, no,
I didn't have any conversation with any Americans.

Q At that point in time , did you know Oliver North?

A No. I did not know Oliver North.

Q You wouldn't have known him if you'd seen him?

A I would not know him if I saw him.

Q Did you know Earl, Robert Earl?

A No. I don't think so. I don't think I've ever
met Earl. I don't know.

Q Did you speak with or socialize with, in any
way, any British-speaking persons there in Haunburg during
these three days?

A NO.

Q Was there any discussion during those meetings
of the sale or potential sale of any missiles to Iran?

A No. Not really. In one of the early discussions
with Ghorbanifar, he asked if there was scane way maybe he
should work toward establishing his bona fides with the
Americans when he was discussing this.

I said, "What do you have in mind?"

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He said, "There' s mU^^H. equipment . Iran has
equipment. Maybe we could provide that to
the Americans to show that we have good contacts and
establish our bona fides."

I said, "What are you thinking of?"
Q Let me slow you down for one second.

You said in one of the early meetings. Are you
taling about the 20th or some shortly thereafter?

A No. I told you before, I only met him once, on
this day, on the 20th, and then in one of these conversations-,
this came up. I'm trying to see if I can refresh my
memory .

Q So when you say one of the early meetings, you
mean one of these three meetings we're talking about?

A Right. It was not the third meeting, but either
the first or second meeting on the 20th.
(A pause.)
Did you get into any further details on what

equipment they had?
No, because I covered that. He said, in return ■
equipment!
[Tehran would want TOW missiles. I

Q
kind of
A

for"

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told him they ought to find a simpler way to establish
his bona fides, if he wanted to deal with the Americans.
Q He didn't tell you what kind of interesting
|equipment he had?
No.

But he specified TOW missiles?
Right. TOW missiles did come up.
That was the only time.

Oid^^H^Bhave anything to say about TOW missiles?
Was he present for that conversation?

A I don't think so. That came up in one of these
conversations. I don't think so.

Q So if he was present, you don't recall?
A I don't.

Q Was there further discussion about the TOWs?
What kind of TOWS?
A No.

Q Would you even be familiar with the TOWs?
A Not particularly, but you know, I've told you
this before, I don't deal with anything that booms or
bangs. As soon as I heard TOW missiles, I said, forget it,
you know. Find something simpler. That's when I asked

mumB

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him if he had ever been in touch with the CIA. That's
when he told me, yes, he'd been in touch with the CIA^^H

'but they'd used him like a piece of Kleenex,
wanted to use him and throw him away. That was his famous
remark.

I told you this guy — you've probably met him.
You've probably talked with him. He's flip.

Q After the meeting in Hamburg, where did you go?

A As I recall, I went to London and then from
London back to Washington.

Q Have you ever met with Hashimi , Ghorbanifar or
^^^Ln Frankfurt?

A No.

Q Have you traveled from Hamburg to Frankfurt by
U.S. military plane?

A No. I mean, wait a minute. U.S. military plane
what? In this period, 1984?

Q Yes.

A No.

Q Do you know the name Mansur Alkazar?

A No, I don't.

Q Do you know the name Batturji?

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A No. These are new names on the list. I don't
recognize them.

Q I wouldn't expect you to have records of those
dealings .

MR. SABA: Excuse me. It might be pronounced

Battur ji.

THE WITNESS: It's not a name —
MR. MC KAY: How's it spelled?
MR. SABA: B-a-t-t-u-r- j-i .

MR. HOLMES: He ' s a London resident. He lives
in England.

BY MR. HOLMES:
Q During 1984 did you speak — and I hope you
understand when I said "speak with," I meant speak with, by
phone or in person, I gather from your answers, you
understood that, any British arms dealer at all.
MR. MC KAY: This is 1984?
MR. HOLMES: 1984.

THE WITNESS: No. As a matter of fact, no, I
haven' t.

BY MR. HOLMES:
Q Have you ever been present when a transaction

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involving TOWs was being discussed, other than the one that
you just mentioned?

A No. I have no recollection, but I know there's
a transaction in there, I told you, with the Portuguese.
There's a Portuguese friend of mine who represents a
Portuguese arms industry thing. He talks about arms and
and so forth, but they don't have TOWs. I don't recall any
conversations with him about TOWs.

Q They do have TOWs.

A Do they? You've contributed to my education. I
didn't they have it.

Q They manufacture the delivery vehicles and sell
TOWs as an add on. You didn't know that?

A No.

Q I'm sure you're aware, because I've seen your
denials in the press, of the allegations of this Leslie
Aspin and his brother Michael. I've tried to cover the
territory myself, but I would like you to tell me why it's
not true. I'm sure you've given it some thought.

Tell me the most salient facts that disprove
the Aspin allegations as you see them.

A First of all, I didn't meet him. That's as

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simple as that. Too, Mr. Razmara and General Hashimi were

there, and they will say that I didn't meet them. More

i importantly, Aspin told the newspaper guy that he did not

talk with me in Hamburg. He's changed his story slightly,

I and he now says that he saw me in Hamburg but he did not

I talk to me.

I I've written a letter to the the "London Observer.

They published it. I got a call from Scotland Yard. If

the Scotland Yard guy is, in fact, bona fide, and he comes

here and meets me at the British Embassy, I will give my

deposition to the effect that I did not meet Mr. Aspin in

Hamburg in November 20, 1984, and I did not talk to him.

Q In any of your discussions with Ghorbanifar or
Hashimi, was there any discussion of the sales of TOWs ,
other than the exchange f or ^^H^^^| equipment?

A No.

Q Was there ever any discussion amongst any of
the people at this meeting or this series of meetings, I
should say, to include^^^^^f about arranging for a
payment for any weapon for Iran?

A No.

Q For example, setting up a bank account, getting

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a Certificate of Deposit, an insurance certificate or any
paperwork at all, relaced to an arms deal, it didn't happen?
A It didn't happen.

MR. HOLMES: Do you want to carry this forward?

EXAMINATION
BY MR. WOODCOCK:
Q Mr. Shackley, I introduced myself before. My
name is Timothy Woodcock. I too am an Associate Counsel
with the Senate Committee.

Let me return, if I may, to the meetings that
you had on November 20 with Ghorbanifar.

When you met ^^^^^^^^^^^^^^^^^| did you
understand that he held any kind of political position or
was affiliated with any political faction within Iran?

A He talked about his views of the situation in
Iran and that there were factional groupings, but I don't
speak Farsi, so all this conversation was being translated
for me by — primarily by Mr, Razmara.

Q Did he associate himself with any of the groupings?
A No. He just identified various groups, talked
about groups being in existence, but he didn't really come
down clear-cut and say, you know, I'm in this group or in

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that kind of a definition.

Q Was his presence there, did you understand that
to be to give you a briefing on politics in Iran or did that
I just happen?

A No. I think my understanding of the meeting was,
here was an interesting guy coming out of Iran. Ghorbanifar
is a guy who is a deal maker. What I understood Ghorbanifar
to be is a guy who is finding somebody coming out on a
purchasing mission, opening a dialogue with him, if he didn't
know him, taking care of their administrative needs, hotels,
women, wine, finding out what they wanted to buy, have the
guy stay in the hotel. Then Ghorbanifar goes out and finds
the product for them and puts the deal together and gets his
commission from the manufacturer.

Q Excuse me. What was in it for him to put you
in contact withi

A Nothing. In other words, he had whatever deal

he was chasing with^^^^^Hon prosthetic devices . Somewhere

in Scandinavia and Germany, he, Ghorbanifar, and Hashimi

i
simply talked about developments in Iran all the time, an |

exchange of information. I was just another adjunct, if you

will, to that particular exchange, an exchange of views.

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Q DC you know whether^^^^^B understood that your
prior career had been with the CIA?

A That I don't know.

Q Certainly , you didn't tell him; is that correct?

A I don't advertise that, but I don't hide it.
If somebody asked me were you with the CIA, I said yes,
but I certainly don't go out and say that's what I did.

Q The reason I ask is, I think the Iranians have a
sensitivity to persons who work with the CIA, because of
their internal politics.

Would you agree with that?

A Yes. They certainly would be sensitive to the
fact that they were in touch with ex-CIA people.

Q And that there might be a political liability
for them back home, if it were known that they were meeting
with ex-CIA people?

A Also, you have to put it in this context. I
mean, I don't think they knew that, because you have to
look at it from this point of view: I am ex-CIA.

So the guy, obviously, he didn't have that sort of picture,
I don't think.

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Q Let me back you up now. You mention Mr. Razmara.
If you've covered this, just tell me.
How did you meet him?
A I covered it.

Q It was through Mr. Razmara that you met Manucher
Hashimi; is that correct?
A Right.

Q Did Mr. Razmara tell you what his prior
relationship was with Mr. Hashimi?

A Yes. They were colleagues.
Q
A

Q Have you ever heard of either from Mr. Razmara,
General Hashimi or anyone else, o^ an individual by the name
of I

A Yes.

Q How would you have heard of this person?

I met^^^^^^^^^^^^Bthrough
Q When would that have been?

A It was sometime in the 1980 -- 1980, that's the
best. That may not be a precise date, but that's the
closest I can come.

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Q Do you recall how it was that you came to be
I introduced to him? Why Mr. Hakim introduced you to him?

A There are two aspects of it. I really met him -
Mr. Hakim was thinking of bringing him to the United States
and he was going to work for him in his business.

Q What business was that, if you recall?

A Stanford Technology. Then later, at some point
in time, we put on an English language training program
for^flH^

Q This is, I gather, after he came to the United
States; is that correct?

A Yes.

Q Did you meet him before he came to the United
States?

A
States .

Q At that time he was a prospective employee of
Mr. Hakim's?

A Hakim's; yes.

Q Now how long, if you can recall, after you first,
met him, did he come to the United States to enroll in your
English language training program?

My first meeting with him was in the United

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Q I don't have any sense of that. I just remember
Jl meeting him. Then there's a gap. Then after some sort of a

|i gap, he was here in the states, and we put on maybe a

three-week or four-week English language training course for
ij him.
I Q Which one of your companies ran that program?

A RAI , as I recall.

Q I gather^^^^^^^^^^Hmust have had some basis
in English; is that right?

A He had some; yes.

Q Who was it who was able to communicate the
English language to him?

A In terms of the training?

Q Right.

A I hired two or three people to teach him.

Q Were any of those people former CIA people?

A The two principal instructors were girls; no, they
were not. But I think in the course of that, we also -- we
may have had one retired person sort of socialize with him
in the evening, so he would continue to use the English
language .

Q Who would that have been?

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h I would have to go back --

Q It wasn't George Cave?

A No.

Q Do you recall whether Mr. Hakim ever discussed
with you the possibility of setting ^^^^^^^^^^Hup in an
L.A. business out on the Coast, the West Coast?

A Let's see. There was a time when Hakim was
involved in some Korean delis. Korean people were working
for him. I remember that coming up in the conversation,
now that you've jiggled my memory.

Gosh, 1 don't remember whether that came up with
>r not.

Q Was it your impression that he went to work for
SDC?

A My impression is that whatever deal they had did
not come to pass, because after that, ^^^^^^^^^H went
back to England.

Q Vfhat's your best recollection as to how long
he was in the United States when this all came apart and
he went back to England?

A It was a short period of time. I would say six
weeks but that's a guesstimate on my part.

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Q Did either Mr. Hakim ^^^^^^^^H explain to
you how it was that they came to know each other?

A NO. I don't recall how they came together.

Q After this initial period when|^^^BHy =ai^e
to the united States and then went back to England, did you
ever meet him again?

A I think I met him once in London.

Q How did that come about?

A I picked up the telephone, called him and had a
conversation with him. I think my wife and I went out to
dinner with him and his wife.

Q Was that just social?

A Yes.

Q Did you ever come to understand that he, himself,
had had some kind of past relationship or continuing
relationship with Manwher Hashimi?

A No. I'm not aware of any -- I think they know
each other, but I'm not aware of any collaboration between
the two on any projects or anything. I've never heard that.

Do you know where you heard that from?

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A No, I don't.

Q Did you ever see them together?

A No.

Q Did you ever hear that they had had a parting of
the ways?

A No, I haven't. You know, let me clarify one
point.

General Hashimi's English is not very good, and
when I basically speak to him, I have to have Mr. Razmara -
there to carry on any kind of a lengthy conversation, other
than the basic social amenities, whereas ^^^^^^f English is
quite good now.

Q Did Mr. Razmara have any kind of a relationship
with ^^^^^^^1 to your knowledge?

A I think they simply knew each other from Iran,
but I don't know.

Q Did Mr. Hakim ever tell you that he was
recommending or thinking about reccxamendingj

Ito the CIA as a soiirce for the CIA? ;

A No.

Q Did you ever know of that from any other source?

A No. You're introducing a new thought. I had not

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E15

heard that thought. I haven't heard that idea.

Q Now if you've answered this one, tell me, please.
How is it that you met Mr. Hakim?

A I've answered that.

Q Do you recall, after having met Mr. Hakim,
recommending him to the CIA as a possible source?

A I've covered that.

MR. HOLMES: If we've rushed through it, if you're
going to cover it, cover it now.

MR. WOODCOCK: All right.
BY MR. WOODCOCK:

Q I gather that you do recall that you recommended
Mr. Hakim to the CIA as a source.

A I would not use your words.

Q Use yours, please.

A I had a meeting with Mr. Hakim. I wrote up a
memorandum on that particular meeting. I put it into the
appropriate distribution mechanism at the Agency and people
looked at Mr. Hakim's contacts that he claimed that he had,
and they concluded that they had contacts that were better,
and they did not want to pursue him, and the matter was
dropped .

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Q Okay. If you can recall, how long had you known
Mr. Hakim before you recommended him for the duties you just
described with the CIA?

MR. MC KAV: Do you accept recommending him?
THE WITNESS: I don't. We're having a little
problem here .

You're saying "recommended," and so forth. What
I did is —

BY MR. WOODCOCK:
Q — floated.

A I mean, it's not unusual for an intelligence
officer to have a meeting with somebody, come back and write
it up, and in the scope of that write-up, saying "I met
Mr. Jones. I talked with him. He's got the following five
interesting contacts. Are you interested in any of these
contacts?"

If they are, then you start trying to put
together a scenario for figuring out how to get to those
contacts, not necessarily through the man that you met.
It could be peeled off in any other different way. That's
what I did. I met a man, wrote a memo, identified his
contacts, put it into channels. I did not recommend. I

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don't recall recommending one way or the other, because I'd
only met the man once at that time. I met him and I wrote
it up.

Q That's what I'm trying to parse through here.

Before you wrote the memorandum, would it be fair
to say you were floating him for whatever he may be worth to
the Agency?

Is that a bad way to put it?

A No. I just simply was reporting a meeting. It's,
a standard operational procedure. You have a meeting with
an interesting person. You report it. And that's what I
did, and the people came back and said that they weren't
interested, and I dropped it. I could have pursued it. I
dropped it.

Q Just so I understand this. By the time you
wrote the memorandum, you had had one meeting on which the
memorandum was based; is that correct?

A That's my recollection.

Q Do you recall how it was that you had met
Mr. Hakim?

A Yes. I previously covered that. I was
introduced to him by Mr. Wilson.

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Was the meeting that you has with him a social

meeting?
A
Q
A
Q

It was a luncheon.
Was that in the area here?
Yes.

Was this somebody that Mr. Wilson thought you
might be interested in, or did Mr. Hakim want to meet you?
What were the dynamics of it?

A The only dynamics were that Wilson said, "Here's
a guy that I know. I think you might enjoy having lunch with
him. "

Q Now at that time , were you ADDO?

A That's my recollection, yes.

Q For the record is the acronym for Associate
Deputy Director of Operations?

A That's correct.

Q Now in the course of this luncheon that you had
with Mr. Hakim, I gather it dawned on you that you were,
indeed, having lunch with an interesting character, and you
begam to make mental note, at least, of the information that '
he was giving you about his background, and so on and so
forth. Is that correct?

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A Right.

Q Was that information that you then transposed to
the memorandum and put into the system; is that correct?

A That's my recollection of it.

Q Did you know of any particular needs that the
Operations Director might have for someone like Mr. Hakim?

A At that time, Iran was in a state of flux. People
were looking for enhanced coverage.

Q Do you recall knowing at that time that Mr. Hakim
also knew Mr. Clines?

A I just don't have any memory of dealing with that
whatsoever.

Q ' Do you recall enlisting or referring this matter,
in any way, to Clines, to Mr. Clines?

A I wouldn't have any reason to, you know, from
what I can remember, I wouldn't think that he would be --
I mean, you can find out these answers by going to the Agency
and finding the memo.

Q If you've already covered this, tell me.

How was it that if you did ever meet, how did
you meet General Secord?

A I covered it.

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Q Do you knc*? whether you would have known General
Secord at the time you met Mr. Hakim for lunch?
A Had I known Secord?

By that time?

Yes.

You met him, I gather, in the Vietnam era?

I met Secord in Laos, somewhere in the '66, '68

A
period.

Q Do you recall knowing ,at the time you met Mr. Hakxm,
that General Secord was in a prominent position with the Air
Force in Iran?

Would that have been something that you think you
would have known at the time?

A Let's see. . I don't know that I can relate it to
that particular meeting.

I knew that Secord was in Iran. By then, I knew
— I think he was a general by then, when he was in Iran,
but I can't link when I knew that against the specific one
luncheon over here. I can't make a track for you.

Q That's all right. If you did meet, when did you
first meet George Cave?

A I know George Cave, and I met him in the Agency,

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but I can't tell you, you know, I can't pin that down.

Q Would it be fair to say that by the time of your
retirement in 1979 that you'd known him for several years?

A Yes. I had known him. The thing is, I don't
know. I mean, my recollection is I knew him during that
period. I knew him before '79.

Q Do you know whether the memo that you sent into
the system on Mr. Hakim ever Ceune to rest with Mr. Cave or
whether he got involved in it at all?

A No, I don't.

Q How about Mr. Claridge? Do you recall him
getting involved in that at all?

That would be Dwayne Dewey Claridge.

A I don't recall him getting involved with that,
but he may have. I don't know. I don't have any memory
of that.

(A pause. )

MR. WOODCOCK: I think that's all I have on that
subject at this time.

Why don't we take a five-minute break, if that's
all right?

(Recess. )

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BY MR. WOODCOCK:

Q Mr. Shackley, I have only a few more questions for
Ji
'l you. Let me direct your attention, if I may, to Manucher

Hashimi again.

Following this meeting that you had on November

29, 1984, did you ever meet with him again?

A No.

Q That was the last meeting with Hashimi?

A Yes.

Q I had understood from your testimony that he had
been a useful resource for you in dividing the goings on
in the Iran-Iraq War.

Given that that's the case, wfcy is that you
didn't see any more of him after November of '84?

A He continued to talk with Mr. Razmara, and as I
told you earlier, his English is less than perfect, and
Mr. Razmara has been in touch with him.

Q So Mr. Razmara has been in touch with him since
November of '84; is that correct?

A Right.

Q Does that continue up to the present?

A It's been some time. I don't know when the last

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time was that they talked.

Q From your understanding of Manucher Hashirai, is
he considered a prominent person in the emigre community,
the Iranian emigre community in Great Britain?

A I think here we have to define, he's not
prominent as a political figure . I think he ' s a respected
individual as somebody who continues to have an interest
in the future of Iran.

Q I'm going to put some names out for you and ask
you if they are feuniliar to you in any way.
The first name would bej

A I may have run across it in FBIS or something,
but the name doesn't ring any bells with me.

How about^^^^^^^^^^^^^l

No. It doesn't ring any bells.

How about

No.

How about ^^

[a fairly common name. You would
have to tell me some thing about him or something, but the
short answer is no, but it is a nam* that I've seen or read

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17A',

in FBXS or something like that.

Q He has an alias. Let me give you that.

No. That doesn't ring any bells with

He has another alias.
No.

How aboutJ

That name is familiar from FBIS or something like
that. That's the kind of name that you see.
Q Do you know Charles Allen?
Yes. I know Charles Allen.
From your days with the CIA?
Yes.
Do you have any kind of ongoing relationship with

him?

No.

Q Have you had any relationship with him since
leaving the CIA?

A NO. I don't ever recall running into him. It's
conceivable that I was at some big party or something, but
I have no memory of running into him since I left.

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MR. WOODCOCK: That does it for me.

Mr. Shackley, thank you. Those are all the

!l
II

i- questions that I have.

l! FURTHER EXAMINATION

BY MR. HOLMES:
Q MR. Shackley, I'm wondering if you're, familiar with
the neime of a company called Vinnell — V-i-n-n-e-1-1?
A Yes, I know Vinnell.

Q Have you ever had a business relationship with
Vinnell?

A I have not .

Q Have any of your companies had?
A We have not.
Q None of your employees?
A No.

Q What is the business of Vinnell, to your
understanding?

A Vinnell, at one time ran the Saudi National
Guard program.

Q When you say "at one time," your understanding
is that they no longer do so?

A I haven't heard anybody speak of it lately, and

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I'm simply not up on it, so I don't know whether that's
still on or not.

Q What was the Saudi National Guard program at the
time that Vinnell was running it?

A Generally, what I know is that it was a training
progrcun for the Saudi National Guard.

It involved air support?

I have no idea. I know nothing about it.

Do you know who at Vinnell was involved in that

Q
program?

A No. The only person that I know of that
allegedly worked there in this progreun was a fellow by the
name of George Morton.

Q How do you know George Morton?

A Mcmy, many years ago, he was in Laos.

Q You've kept up contact with Mr. Morton since
then?

A I haven't seen him in a long time, but people

will say, "I've seen George, he says hello." "If you see

him, say 'hi,'" if sraneone who knows us says hi.

Q Who are you in touch with?

A Morton was a colonel or lieutenant colonel in

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the Special Forces or something. He's known to a lot of the
Department .

Q What was his relationship with Vinnell?

A My understanding was he worked for them. That's
all I know. I've heard others say that George Morton works
for Vinnell.

Q Did he have a particular division or function?

A You're trying to make a silk purse out of a sow's
ear. I know nothing further than what I was going to say.

Q When did your first meet Ollie North, or have you
ever?

A Yes, I've met Ollie North once. I met him in it
must have been June 1986.

Q In what connection did you meet him?

A When I was at a lawyer's office talking to
Mr. Secord about the Miami suit.

Q In which lawyer's office?

A Mr. Green's office. I told you that before.

Q I didn't catch North's name.

A No.

Q This is a separate meeting?

A No, no. I was at — no, this is not a separate

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meeting. I went to see Mr. Secord and his lawyer. While I
was there discussing the Miami case, at some point in the
meeting. North walked in.

Q Who was present? Yourself, Green, Secord, North?
Anybody else?

A The meeting was Secord, myself and Green. All
right. Then at some point during that meeting. North walked
in. Shortly after that, I left.

Q That's the only time that you ever met?

A That's the only time I know that I've met him or
seen him.

Q What did he say while he was there?

A He wanted to talk with Secord and Green, and it
was clear that they weren't going to be talking while I was
there .

Q Is North a defendant in that lawsuit?

A No. He's not one of the 29 in that suit.
MR. MC KAY: No.
Off the record?
(Discussion off the record.)
BY MR. HOLMES:

Q Do you ever speak about Mr . North with Secord?

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No.

Nor Hakim?

No.

Q Have you ever heard of a man named Kevin Katke?

A Yes. That's that crazy newspaper article put out
by the "Miami Herald."

Q I don't keep up with the "Miami Herald." You'll
have to inform me.

MR. MC KAY: Oh, you're missing something.
THE WITNESS: We've been bombarded by all sorts
of telephone calls, and some newspaper reporter was badgering
us back here a couple of months ago that somehow or other
a gaggle of people came into our office and were somehow
trying to put together something with a medical supply
operation to the contras. The story is that they had
figured out that we were a conduit to CIA, and therefore,
they were going to give us this proposal to evaluate, and
we would send it to CIA for evaluation. Well, we chased
that for several days to sort it out. We talked to the
"Miami Herald," and they never got the story straight. They
still claim that somebody came to our office, and one of
the guys who allegedly was involved in this is a fellow

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by the name of Katke.

Q How was Katke allegedly involved?

A I don't know. He allegedly came to our office
with this proposal, as I could unravel it.

Q And you're unraveling it from the media?

A From the media harassing us.

Q Do you know whether Kevin Katke was ever at your
offices?

A No. I've talked to the people, and nobody seems
to recall Kevin Katke. I certainly didn't meet him.

Q Mr. Jameson works for you, doesn't he?

A Right.

Q What would you describe his function as?

A He's a vice president of RAI . He is also a
shareholder in TGS . He's an analyst.

Q What's his function? Analyst?

A Yes. He primarily covers the Soviet Union,
Eastern Europe and Western Europe.

Q And Mr. Gillespie also works with you?

A Mr. Gillespie works in TGS.

Q Only?

A Yes. I think maybe at some point in the past

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I used him on some RAI project, but his primary function is
TGS.

Q Have you ever discussed with Mr. Jameson events
in Grenada?

A No. Wait a minute. Katke. Maybe that's — is
this guy a black? There's somebody came into our office,
because Jcimeson had the FBI in to talk to him a couple of
times about somebody that they talked to from Grenada. I
think I may have got the nam.es confused here.

Q Let's sort it out gradually.

A Let's back off.

Q I didn't hear what you just told me. You said
that somebody came in your office, because Jameson what?

A Now that you're talking on Grenada, can you
help me clarify this thing.

Q Sure .

A Has Katke got scHnething to do with Grenada?

Q He does, among other things. I don't know
whether he also has something to do with —

A Well, then, I've had a slip here.

Q Let's back up and start in again from a different
angle.

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A All right. If Katke is an individual tied to
Grenada, there was a gentleman by the name of Katke, now
that you mention Grenada, who came to our office, and he
talked with Mr. Jameson.

Q Yes.

A I think he also talked with Mr. Gillespie.

Q All right.

A Subsequent to that, as I recall, Mr. Jameson
talked to a couple of FBI people about the visit from
Mr. Katke, the gentleman involved in Grenada.

Q I gather that Mr. Gillespie or Mr. Jameson told
you about it.

A Yes. He told me that the FBI was coming in to
talk to him about, you know, Grenada, and so forth, and
this fellow, Katke. But that happened back quite a while
ago, and I just got this in the wrong slot.

Q What did Katke have to say about Grenada?

A I have no idea. Talk to Mr. Jameson.

Q What did Jameson tell you about it?

A You know, basically, it was a guy came in and
talked to him about Grenada. Grenada's not on our plate.
I'm not interested in Grenada. It's not an oil producer.

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It doesn't have any oil, doesn't have any geological traces
of oil, and I didn't fool with it. And Jamie does a number
of hip pocket things like this.

Q Okay. What was it? Obviously, in a small
business like that, when the FBI's coming in to talk to you
about contacts you've had, and you're telling your boss
why the FBI's coming in to visit your company, you give him
a pretty decent explanation.

A No. I mean —

Q What did Jameson tell you about this?

A Jameson simply told me that he'd had a
conversation with this guy. The guy had been in to talk
to him about Grenada. He'd sat and listened to him, sent
him on his way. Shortly thereafter, the FBI C2une in and
wanted to know what they had talked about, and that was it.

Q All right. And what did Jcuneson tell you that
he had told the FBI?

A That's what I just told you. Whatever subject
matter was not an item of importemce to me. I wasn't
concerned with Grenada. I'm not interested in Grenada.
I didn't ask him to write me a five-page memorandum on it.

Q Did he write you anything on it?

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I didn't ask him to write me anything on it.
Did he write you anything on it?
I don't believe so.

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Q Did anybody in your office write any memo to the
file about it?

A I don't think so. I didn't look at Mr. Katke ' s
name. I even had it confused with something else when you
first raised it with me.

Q Your office -- you had a visit from the FBI about
some prior business that had been transacted in your office,
and there was no paper created about it?

A We've got a lot of things to do and creating
paper is not one of them.

Q What was it, in general, that Katke had in
mind when he came to your office and spoke with Jameson?

A What else can I say to you? I don't know. I
didn't talk to the man. I didn't interrogate Jameson on
what he talked to the man about.

Q And you're saying that Jameson never told you
what his conversation Mqtfii with Katke?

A He talked about Grenada, but I didn't pay — it
was not a matter of importance to me. I didn't retain

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anything. As you've just seen, I had the guy mixed up with
somebody else.

Q That's different than forgetting that the FBI
came in there talking to your employees.

A No. Jcimeson talks to the FBI quite frequently.

Q On this occasion, the FBI arrived to speak with
Jameson; right?

A Yes. That's my recollection.

Q Katke had notified the FBI. They came an talked
to Jameson.

A That I don't know. I don't know how the FBI got
onto it. Maybe they were surveilling Katke. I don't know
what they were doing with him.

Q Did you discuss with Gillespie what Katke was
doing in the office?

A Well, my recollection is that Gillespie said
I sat in while Jaunie talked and one of his people had come
in through the door. I mean, Jeimie's always talking to
people. He collects people.

Q Mr. Shackley, if you really didn't talk about
this with your employees , then you'll remember not talking
about it. Would it refresh your recollection, if I

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suggested that Katke was there talking about overthrowing
the government of Grenada?

A He may have been, but, you know, really, if that
is of that much interest to you, you ought to talk to these
other people. I didn't sit in on the conversation. I
didn't talk to the man, and it was not an item that was of
interest to me.

Q When did you first meet Michael Ledeen?

A Michael Ledeen? I met him after I left the
Agency, maybe 1980, maybe 1979. Somewhere in there.

Q Let me ask you a few more questions ' along this
Grenada line.

Have you ever heard of Vista, International?

A No, I don't think so.

Q A company headquartered in Florida.

A No. That doesn't ring any bells with me.

Q Do you know about Mountel — M-o-u-n-t-e-1?

A There's a fellow who has a name something like
that. Is this guy an ex-Special Forces major or something
like that?

Q That would make sense.

A He is somebody that is known to Mr. Gillespie.

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I think he may have been in our office. My recollection
is, he may have been in our office one time after he
retired from Special Forces.

Q What does Bob Mountel do for a living?

A Z have no idea.

Q Was this visit to your office also in relation
to Grenada?

A No, not that I recall. He was looking for work
for some corporate group that he was putting together, of
security specialists, if it's the same individual.

Q Do you know of a man named Dick Gadd?

A I've only seen his name. I do not personally
know him.

Q Do you know of him? Have you heard his name
before it came out in hearings?

A No, I don't. He's on this list here. Richard
Gadd, but I dori't know him. I've never heard of him.

Q Do you know ofl

A It's on here. Santa Lucia Airways. That's all
I know about it

Q You had never heard of it before it came out in
the hearings?

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A No, not that I know of.

Q Did you have any connection with Southern Air
Transport?

A Well, I know Southern Air Transport back in the
days when I was in the government, but I haven't had any
contacts with Southern Air Transport since I retired.

Q What contact did you have with them when you were
in the government?

A I knew that they did work for the government, and
I think that's all I can tell you, in terms of my obligations
under the secrecy agreement.

Q Your obligations under the secrecy agreement are
not implicated in any way by testifying under oath.

A You're not supposed to discuss the sources and
methods. I mean, if you say to me, "Is Mr, ABC a spy? Was
he in penetration of the Politburo." or something like that,
you know, I'm certainly not going to tell you that. I'm
going to go back to the Agency.

Q Let me ask you, since you have been retired, have
you had any contacts with Southern Air Transport?

A No. I just told you that. I have not.

Q Or with any of the people that work there?

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I A Not that I know of.

I Q Before I get further afield, I want to ask about
the allegations. I think they must be in the lawsuit, but if
they're not, they're made by the Christie Institute people
on the radio and wherever, about activities in the Bahamas
known to the Christie Institute as the "Fish Farm."

Are you aware of the allegations I'm talking about?
MR. MC KAY: I've heard Sheehan make it on the
radio. What is the purpose of this, and why are you
investigating the Christie Institute's allegations?
MR. HOLMES: I'm not.

MR. MC KAY: That's exaetly what I'm concerned
about, about this whole matter. It's all going to go over --
it's not going to go over to them, but something's going to
go to them. Mr. Sheehan, as he tells us in his letter,
tells us frequently how close contact he has with the
COTTonittee. I don't know what purpose you have going
through. If it's something related to Iran or Nicaragua —
I don't think the Fish Farm is. I don't know what the Fish
Farm is. But Sheehan has talked aUoout it on the radio.
That's something he's very interested in pursuing. I'm
very concerned about talking about whatever the

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Fish Farm is in pursuit of his allegations.

MR. HOLMES: Our mandate is broader than just
Iran and Nicaragua. It includes secret military assistance
to any part of the globe. Also, it is a matter of concern
il to us, from an oversight point of view, whether or not
11 paramilitary operations, such as I understand the Fish Farm
allegation is, have gone on and are going on, whether or not,
it's really —

MR. MC KAY: Is your mandate broader than what's in
the committee resolution?

MR. HOLMES: No. That's the resolution.

MR.MC KAY: I may be misreading it, because I've
misread other things that you read differently, but I
don't see where there's this broad reference to military
supplies anywhere in the world. Is that what you said?

(A pause. )

MR. HOLMES: Well, "This use of proceeds from any
transaction in Nicaragua or any other foreign country to
further any political purpose or activity within the United
States or any other country or further any other purpose of
any nature whatsoever."

MR. MC KAY; But it's proceeds from the sale.

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I Is that Iran?

j MR. HOLMES: As I understand his allegation —

MR. MC KAY: I don't think that's his allegation.

MR. HOLMES: I'm not claiming to understand his
allegation, but I listen to him on the radio.

MR. MC KAY: I'll let Mr. Shackley answer this one,
but I'm not going to sit here, if I can avoid it, and go
through the Christie lawsuit, because that's not a proper
purpose of the committee. It's an outrageous thing that he .
has to spend money defending against. It's more outrageous
having to sit here answering questi-ons about the lawsuit .

MR. HOLMES: I can understand your sentiments, but
I am sure you can understand that the committee would like
to hear from his own mouth that it didn't happen.

MR, MC KAY: I don't agree with your interpretation
of this. I'll let him answer this question, and we'll deal
with the others as they come up.

THE WITNESS : How about restating the question?

BY MR. HOLMES:
Q I was just laying the foundation in that question,
and that is, are you familiar with the allegation of the
existence of something called the "Fish Farm" in the

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Bahamas?

A No. I have heard tapes or excerpts from tapes
by the Christie Institute making some reference to the
Fish Farm. I don't know what the Fish Farm is.

Q The allegation, as I understand it, is that there
is an organization, or I should say, a group of individuals
who are gathered together and located in the Caribbean, who
have, as one of their purposes, covert paramilitary activity
directed against communist interests worldwide, and of course,
in particular, in Central America.

MR. MC KAY: That's your statement of the allegation.
What's the question?

MR. HOLMES: That's how I understand it.
BY MR. HOLMES:
Q My question is, are you familiar or have you
ever heard from any source whatsoever that such an
organization or group of individuals exists?
A Other than what?

Q Other than the allegations made in the Christie
lawsuit.

MR. MC KAY: It's not in the lawsuit.

THE WITNESS: He's made this on tapes, I think.

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That's the only — in his various — whatever you want to
call it.

MR. MC KAY: You don't need to go through that.
Do you know anything about this?

THE WITNESS: I don't know anything about the
Fish Farm.

BY MR. HOLMES:

Q Have you been to the Bahamas?

A Yes, I have.

Q On a number of occasions?

A Since — how about defining it?

Q Since, say, 1980.

A Yes, I have been down there a number of times.

Q Approximately how many times?

A It would be hard for me to guess. I've been down
there on business relative to the food business, I told you
before, importing from Argentina to the Bahamas.

Q Is that your only business in the Bahamas?

A No. I have put in a modular storage system for
the Bahamas Electric Company.

Q Have you had any other business in the Bahamas?

A No. I have been negotiating for the purchase of

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an island down there, but I have not concluded that.

Q Which island is that?

A It's an island caled Little San Salvador.

Q From whom are you negotiating the purchase?

A From the current owners of it, which is a
Bahamian Corporation.

Q Who are the people involved in the corporation?

A The main individual is a Bahamian lawyer by the
name of Peter Christie.

Q Is he a principal or is he an agent?

A He's also a principal.

Q Who are the other principals?

A I don't know that I have all the names with me
right now, because I've been dealing with him. He's a
fellow by the name of -- I think one of the owners is a
fellow by the name of de San Phalle.

Q For whom are you negotiating the purchase?

A For Mr. Dois.

Q What's the purpose of the purchase?

A A possible site for a residence and/or a
corporate headquarters.

Q Not necessarily relating to the oil business?

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A I don't know what his plans are beyond what I've
]ust told you. Residence and/or corporate headquarters.

Q And the site of the island?

A I've forgotten how many acres it is. It's a
fairly sizable island.

Q Under 100 acres?

A I think it's more than 100 acres. I just don't
have the legal description of the island.

Q Have you ever met in the Bahamas with anybody who
has been associated with, past or present, any special
operations or paramilitary organizations?

A No, I have not. I don't recall having any
meetings there.

Q Have you ever engaged in business related to
counterinsurgency programs? .

MR. MC KAY: Is this arriving from funds generated
by activities in Iran? Again, I don't see what it has to
do with the mandate'.

This is Mr. Sheehan, pure and simple.
MR. HOLMES: This particular question relates
to Mr. Ledeen.

MR. MC KAY: And if this question arises from

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Mr. Sheehan —

MR. HOLMES: I never heard Sheehan talking anything
about Mr . Ledeen .

MR. MC KAY: You're talking about counter-
insurgency. The complaint is full of 30 years of counter-
insurgency. That's what the bulk of the Christie suit is
about.

MR. HOLMES: Let's start with Mr. Ledeen again.
BY MR. HOLMES:

Q You know Mr. Ledeen.

A Right .

Q You've met him since he retired.

A Right.

Q Have you and Mr. Ledeen ever engaged in business
together, discussions of business?

A Yes, we have.

Q Would you detail those discussions, please,
chronologically .

A I'd say, back in 1980, we put on sort of a
war game-type exercise in Italy.

Q For whom did you put on the exercise?

A For one of the Italian security services.

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Q Which one?

A I think it was the military service.

Q There ' s an acronym?

A I think it's SISME. It's the Italian Military
Intelligence.

Q You were paid for that activity?

A Yes, I was paid for that activity by Mr. Ledeen.

Q Was it a contract that he had with the military
service that you were subcontracting on or what?

A I gave a series of lectures based on my book.

MR. WOODCOCK: That book is "The Third Option"?
THE WITNESS: Right.
BY MR. HOLMES:

Q Were you or Mr. Ledeen seeking further business
with the Italian military service?

A I was not.

Q Was Mr. Ledeen?

A I think Mr. Ledeen had other proposals for
war game type exercises pending that he had either put
proposals forth on or had proposals pending or was thinking
about putting proposals forward.

Q You had discussed those proposals with him?

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A No. I knew he was involved in them and was
putting proposals together with other people.

Q Had you ever discussed with him or any of these
other people the possiblity that you could provide equipment
for any activity that he later was going to get a contract
to you?

A NO.

Q Have you ever provided that kind of equipment?
A I have not.

Q Would you be in a position to provide, what I
hestitate to call "counterinsurgency" equipment?

MR. MC KAY: Do you know what that means?
THE WITNESS: You'd have to give me a definition
of what you are talking about, in terms of counter-
insurgency equipment.

Would I be in a position to provide counter-
insurgency equipment? I don't know what you mean.

MR. MC KAY: I'll also object on the grounds of
relevancy. I don't see what difference it makes if he could
or could not do it, if he hasn't done it.
BY MR. HOLMES:
Q Did you provide equipment to the so-called

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"war game exercise"?

A I did not.

Q Who did?

A There wasn't any equipment.

Q What was the exercise?

A The exercise was a series of lectures, and what,
in essence, is a command post exercise, where you're exchanging
paper to create scenarios.

Q So there was no field activity at all?

A None. It's like a war game exercise. You have
participants on various teams. You create scenarios. People
respond.

Q Since that time, have you had any contacts with
Mr. Ledeen?

A Yes. I've stayed in regular contact with
Mr. Ledeen. I've tried to do some oil business with him.

Q Is that the only business you've discussed with
him since then?

A That's the only business I can think of. He also
was in touch with Mr. Jameson. He and Mr. Jameson were
pursuing some oil concessions, separate from what I was

doing,

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Q When you said he was in touch with Mr. Jamesen,
you mean, you were permitting Mr. Jamesen to operate as a
free agent outside of the corporation?

A Yes. Mr. Jameson has money of his own. He's
made some investments, and he was pursuing some activity
related to those investments.

Q Does the corporation pass on those kinds of
opportunities when they arise and put a letter of "no
conflict" in the file or something?

A No. Jamie might mention it to me and say he's
doing this. Am I interested in it? If I say no, then he
goes on and pursues it.

Q No memo to cover it?

A No.

Q So what did Mr. j2uneson tell you with regard to
this contact with Ledeen?

A They were working on some oil activities, and I
thought it was a nonevent and didn't want to waste my time
with it, and if he wanted to pursue it with Mr. Ledeen, that
was fine.

Q Where were these oil concessions?

A I think they were dealing with a company in

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Q That's where the company was; where were the
concessions?

A I think Mr. Jameson has a piece of a concession
or had a piece of a concession in, I think it was either
Honduras or Guatemala.

Q Now the oil business that you discussed with
Ledeen, was that corporate business?

A Yes, that was corporate business. I was
interested in pursuing at one time an opening to Nigeria.
Mr, Ledeen and I thought that because we saw Portugal was
buying from Nigeria that that might be a possibility. There
have been several coups in Nigeria, and I've forgotten which
coup it was after, when everybody's lines of communications
were broken, and I was trying to get into the Nigerian
market.

Mr. Ledeen introduced me to a leading official
in the Portuguese Oil Company.

Q Will there be references to that in the documents
you provided?

A Yes, I think there's correspondence there.

Q How would it be filed? Under "Ledeen"?

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A No, I think it's probably under — it's probably
in the folder titled "Petrogal {Pedro Perez de Miranda)."

Q Is that the person you were introduced to?

A Yes.

(A pause. )

Q Have we completely catalogued your discussions
with Mr . Ledeen?

A Yes, as far as I can think of it. There's oil
with me, some oil deals that he worked on with Jamie. The
oil concession area.

Q For whom was Ledeen dealing in these oil deals?

A As far as I could see, he was dealing for himself.
He was trying to be a broker and put a deal together and
get a percentage of it, of the deal.

Q Does he have any expertise in the oil industry?

A No, but that doesn't mean anything. Guys try this
all the time. During tight periods in the market people are
around trying to put these together all the time, based on
the fact that they know somebody.

Q So he's daisy chaining on daisy chains.

A Right. That's why, a lot of these, I won't
fool with. That's why I'm not interested in some of them.

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Q Apart from those arrangements, has Ledeen ever
collaborated with you in the risk analysis business?

A I think maybe on a couple of occasions he's
written some papers for me.
Q What about?

A Probably about the Italian political scene.
Q As it related to oil?

A No, just in terms of — can I look through the
file here? It may refresh my memory on that, and I'm getting
tired, and you're asking me a lot of different questions.
MR. MC KAY: Off the record.
(Discussion off the record.)

THE WITNESS: He wrote a paper for me on the
Fanfani government. That was in December of '82.

Let me just flip through this real quickly, and
I'll see.

(A pause. )

Mr. Ledeen did introduce - e to something called
The Young Presidents Organization. These are CEOs of
fast-growing companies. The criteria was, to be a member of
this organization, you had to have gross receipts of
something like $20 million or $25 million a year, be under

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age such-and-such, and so forth.

They put together seminars, trips and travel, and
so forth, and Ledeen introduced me to a couple of these
people. They wanted me to participate with them in a
trip either this year or next year — no, the fall of '87.
I told them I can't do it.

BY MR. HOLMES:
Q Other contacts with Ledeen from '82 forward?
A You know, I'm in — we discussed the business,
you know, and I tried to describe to you what the business
is, and I am in touch with him on a social basis. That's
what occurred on this Iran situation. I was having a
periodic lunch with him in May of 1985, when he asked me
at lunch — he probably said to me, "You spend a lot of
time covering the Middle East. Have you got any bright
ideas on how we can get the hostages out?"

I said, "No, I don't have any bright ideas."

And then, after a while, I said, "You know, but
back last year, I met these people, and I had an experience.
I turned in a paper, and I heard from the State Department,
they weren't interested."

And he said, "Gee, that's interesting. You know.

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could you give me an update on that, and could I get the

original paper? I'll turn it in to somebody in the NSC."

! Q Is that the first time he'd ever mentioned that
paper to Ledeen?

A Yes.

Q Is that the first time you'd ever mentioned the
events of November 20, '84, to Ledeen?

A To the best of my knowledge, yes.

Q Why is that? Why hadn't you mentioned it to
him before?

A Why should I mention it to him?

Q He's at the NSC. He's supposed to be working
on counterterrorism.

A No. You mean -- I keep my own counsel. I don't
run around and tell everybody that I meet for lunch everything
I'm doing. Why? That's not my personality. Maybe it's
yours, but that's not mine.

Q In any event, you didn't tell him?

A No.

Q Who had you told since November of '84 about that
meeting?

A I don't recall telling anybody except the

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people in my office.
(A pause.)

You seem to think I should be out there
advertising this thing. I had a meeting; I reported it.
Bangl Finished I

Q I don't want you to read into my questions.
I just want to know what you did.
EXAMINATION
BY MR. SABA;

Q On your topic, do you know if Mr. Ledeen during
the period '84 to the present was in the employ of any
government or any government agency, U.S. or otherwise?

A Since '84, the only thing that I know of is, he
has said that he was an adviser to the National Security
Counsel .

Q Do you know if he was employed by any other
government in any capacity?

A No, not that I know of.

Q Do you know if he was an adviser or consultant,
either to Mr . Schwimmer or to Mr . Deraudy?

A Those names have never come up in conversations,
between us. I have no knowledge of that.

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Q Do you know if he was a consultant to any Israeli
company?

A I never heard him mention anything about that.
Q Or person?

A No, I never heard him mention anything like that.
MR. SABA: That's all on that line.
MR. HOLMES: I think this would probably be a
good enough time to break.

Why don't we say 9:00 o'clock on Monday?
MR. MC KAY: I've got a meeting I really need to
attend for an hour, starting at 8:30, so we could be here
by 10:00.

It's something that's been set a long time.
I didn't know you were talking about starting that early.
(Discussion off the record.)
(Whereupon, at 4:45 p.m., the taking of the
deposition was adjourned, to reconvene at 10:00 a.m., on
Monday, September 21, 1987.)

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TRANSCRIPT

UNITED STATES SENATE
SELECT COMMITTEE ON
SECRET MILITARY ASSISTANCE TO
IRAN AND THE NICARAGUAN OPPOSITION

DEPOSITION OF THEODORE G. SHACKLEY (Continued)

QQEK MTt ' ng ^^ mpgs J^y

lOASsra

Washington, D.C.
Monday, September 21, 1987

c-n

Ace-Federal Reporters, Lnc.

Sitnotype Reponm
444 North Capitol Street

\^^) J*/- jAAJ unaei provisions ol E 0 12356

Nitionwidt Qovwa^ by K Johnson, National Secunty Council

800-336-6646

8;^ 736 207

208

S^^i

llfayfjW^Sfl

204

UNITED STATES SENATE
SELECT COMMITTEE ON
SECRET MILITARY ASSISTANCE TO
IRAN AND THE NICARAGUAN OPPOSITION

DEPOSITION OF THEODORE G. SHACKLEY (Continued)

Washington, D.C.

Monday, September 21, 1987
The second day of the deposition of
THEODORE G. SHACKLEY, called for examination at the
offices of taie Senate Select Coqgnittee, Suite 901, the
Hart Senate Office Building, at 10:15 a.m., before
LOUIS P. WAIBEL, a Notary Public within and for the
District of Columbia, when were present on behalf of the
respective parties:

CAMERON HOLMES, Esq.

Associate Counsel

TIMOTHY WOODCOCK, Esq.

Associate Counsel

JOHN MONSKY, Esq.

Associate Counsel

United States Senate
Select Committee on Secret
Military Assistance to Iran
and the Niceuraguan Opposition.

..eciassified/Released on^i±!!fi*
■met provisions o1 E 0 12356
iohnson. National Seeuiity Council

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JOSEPH P. SABA, Esq.
Associate Majority Counsel

United States House of

Representatives Select

Connnittee to Investigate

Covert Arms Transactions with Iran

JACK MC KAY, Esq.
Shaw Pittman Potts & Trowbridge
2300 N Street, N,W,
Washington, D.C.

On behalf of the deponent

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CONTENTS

206

WITNESS

Theodore G. Shackley
by Mr . Holmes

By Mr. Woodcock

By Mr . Monsky

EXAMINATION

207,301,
462

227

452, 461, 473

EXHIBI^TS
SHACKLEY DEPOSITION EXHIBITS
Exhibit 8
Exhibit 9
Exhibit 10
Exhibit 11
Exhibit 12
Exhibit 13

IDENTIFIED
241
269
291
297
298
298

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Whereupon ,

THEODORE G, SHACKLEY
resumed the stand and, having been previously duly sworn, was
examined and testified further as follows:
EXAMINATION

BY MR. HOLMES:
Q Mr. Shackley, when we left off in the last session
of this deposition, we had before us these two boxes of
exhibits, which became Exhibit 6 and Exhibit 7, from RAI and
TGS, respectively.

Have you ever been associated with any other
corporations other than these two?

MR. MC KAY: Let me just ask, would you define what
you mean by "associated"? I mean, he has perhaps been an
employee or a consultant or \^iatever.

MR. HOLMES: Sure.

BY MR. HOLMES:
Q I mean, in this question, to be as broad as
possible. In other words, em employee, agent, director,
officer, a person with substantial control over the affairs '
of or representative of any corporation.

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A I think I told you the last time we talked that I
had done some work for a corporation called API Distributors,
and we discussed that rather thoroughly.

Q So there was API . Any others?

A There was IRT, which was a company that was — and
SSI.

Q Let's just get the list first. Then we'll go down
and explore them, if necessary.

Are there any other corporations that would belong
on this list?

A No. Then I told you the other day that I did some
consulting work for the sequence of Hakim, Triangle Associates
and Stanford Technology. And for a short period of time, I
did some consulting work for EATSCO.

Q Any others? We talked a little bit eibout

Trans-World, and that's also a consulting business.

A We talked eUxiut Trans-World and its various entities.

Q Are there others?

A You know, I can't think of —

Q Was — j

A Again, go back to the basic question. I'm not a
director or haven't been a director or a stockholder, and I i

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have done work for these companies as a consultant. I'm
just trying to think who else I might have done consulting
work for, but I don't think that that's the scope of your
question, is it?

Q If you were a consultant for a corporation on a
long-term or substantial basis, that would be within the
scope of the question.

MR. MC KAY: We may have given you more than you
asked for. I would say for the record, I don't want the
record to imply, because he listed these, that he's been
consulting for them on a long-term basis.

MR. HOLMES: Sure.

THE WITNESS: I did some consulting work for a
compeuiy called Bernstein Brothers. I'm having trouble now
trying to think who all the various people were that I did
consulting work for, but I think that's as close as I can
recall at this particular point. There might have been some
oth«r companies.

BY MR. HOLMES:
Q Before we go on to discuss these corporations,
I would like to ask you the same question again with regard
to any other entity or association. In other words, a group

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of people who are not necessarily incorporation, to include
partnerships, joint ventures, associations, foreign
corporations, foreign businesses that are not incorporated,
in the sense that we use the term in the United States.

A I think, you know, on the TGS and the Kuwait
project, we do have a joint venture for one of the warehouse
projects we did in Kuwait.

Q And the name of the joint venture is?

A I can't think of it. It's in the file. For the

moment, you know, I got a blank.

Q We'll call it the Kuwaiti Joint Venture.

A Yes.

Q And it's in the file?

A The cc^npany is a conduit and foundation.

Q All right. Let me get it straight. Is that your
joint venturer?

A Yes.

Q And is that also the name of the joint venture
itMlf?

A No. The joint venture is TGS International/Condui!
and Foundation Corporation.

Q All right. Then let's continue with this list. \

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A At the moment, I just can't think of any other that
would be a joint venture.

Q Remember, this includes things other than joint
ventures — associations, partnerships, and even governmental
agencies.

A The only government contracts I have had is with

TGS International and has been the U.S. government contract,

foreign military sales, contracts with Kuwait.

If you let me look at the files in the TGS, I -think

there's a rundown there, because we had the first construction

warehouse project that we did in Kuwait was with Lockheed.

And I forgot whether we were a subcontractor. I think we

were a subcontractor to Lockheed.

MR . HOLMES : You ' re certainly welcome to look at

the files any time you want. I just rushed past it, because

I wasn't particularly interested in the Kuwait project.

THE WITNESS: I'm just trying to go down this list.

I can't think of any other joint ventures that we had. I

certainly had no partnerships.

BY MR. HOLMES: '

I
I
Q All right. Let's return to the two lists that we

have created.

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We discussed API.

A Yes.

Q And we have discussed SSI. We discussed all of
your associations with Triangle Associates.

A Yes, as far as I know, we have gone through that.

A And also with STC — Stanford Technology
Corporation?

A Yes. Based on what we covered the other day.

Q Based on what we covered the other day and also
with STGI?

A I don ' t think I ever did any work for STGI . I
was very careful to tell you that all of my correspondence,
as far as I am concerned, was with Stanford Technology
Corporation.

Q Very well . We have discussed at least some of your
dealings with Trans-World Oil, so we'll check that off for
the moment. That leaves IRI.

What association have you had with IRT?

A That was a company that Mr. Clines had that was
essentially an international trading company. I think I
talked with you before. It was a company that we tried to
do international buying and selling. It was primarily
during that period of time, dealing with the sales of ■

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agricultural canned products and so forth to the Bahamas.

Q The name was International Trade and Research?

A Right.

Q Did you ever have euiy equity position in that
ccRipany?

A No, I did not.

Q You were strictly a consultant?

A Right.

Q You never participated in any funding of the
ccopany in any way, shape or form?

A No. And I was not paid by them, except for
expenses .

Q Let's move down to EATSCO. This is Egyptian
American Transportation Company; is that correct?

A Egyptian American Transport Compemy, I think it
was, but it may be Transportation. I don't remember the
full title.

Q And when were you first associated with that
entity?

A I did some consulting work with them for about
three months. Three or four months, as I recall.

Q Would that be reflected in records that you

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provided us?

A I don't think so, because if I'm not mistaken, I
think that was probably 1980, maybe '81. I don't remember
the exact period. It was either '80 or '81, and it was about
a three or four-month period there that we had turned out
some papers for them.

Q What was the nature of your consultancy?

A They were interested in expanding their business
in several areas . They wanted general papers on the
political/economic climate in these countries, as I recall.

Q Which countries did you examine for them?

A You know, that's been a long time ago. I don't
remember, specifically. That's seven years ago. That's a
long time ago. I'm having trouble thinking what countries
they were. I think one of them may have been Pakistan.

Q Did you produce papers for them?

A Yes.

Q What was the approximate total of payment you
received from them?

A Probably somewhere in the neighborhood of about
$8000 was the total. I'd say about three or four months we

did work for them.

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Q Would that be a net or gross figure, including
travel?

A I didn't do any travel for them. It was all turning
out papers.

Q And for whom did you work, specifically? What
individuals did you report to?

A A the particular time period, the two people that
I dealt with were Mr. Salim emd Mr. Clines.

Q Had you ever met Salim before?

A Before Z started doing these papers for him?

Q Yes.

A Yes, I think I had met him prior to that, yes, but
I don't remember exactly when. Maybe early in 1980.

Q How did you meet hiffl?

A I met hia through Mr. Clines.

Q Did you have anybody else help you do the work?

A Well, whatever people were employed with me at the
time were helping to turn out the papers. I didn't turn
out every paper myself.

Q Who were they? j

A I can't tell you who worked on the papers. I've ;
having trouble even remembering the papers, let alone the — j

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Q So it would have been just your staff people? You
didn't go outside to an outside consultant?

A I don't recall going to an outside consultant for
anything that we were doing for them, no. I don't recall
that,

Q I gather you had sane discussions or one or more
discussions with Salim and Clines about why you were being
asked to do this work, and it had something to do with the
expansion of EATSCO?

A They were interested in other parts of the world.
I had the impression they were interested in expanding into
other parts of the world.

Q What is it that they were expanding?

A My impression was that they were in the
transportation business and that they were looking at the
possibility of expanding their trauisportation business.

Q Have you ever dealt with an R. G. Hobleman Company?

A Yes.

Q What has been the nature of your dealings with

i
Hobleman from the beginning?

A Hobleman was, essentially, a freight forwarding

company. I used them to arrange shipping from places like

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Argentina to the Bahamas, when food containers — containers
of corned beef, for exaimple, were purchased. The freight
forwarding, we used R. G. Hobleman to arrange that.

Q When was the first time that you had any dealings
with R. G. Hobleman people?

A It's hard to say. Possibly sometime in 1979, after
I retired and started working on some of these. Maybe 1980.
I can't be more precise than that.

Q In any event, it was during your association with
Clines and his various compemies?

A Right.

Q API, IRT and SSI?

A Yes. My main recollection of R. G. Hobleman is
in the context of moving food products, and that would have
been with IRT. And there were such things like corned beef
from Argentina, com from Canada and thing* like that.

Q How did you first make contact with R. G. Hobleman?

A I don't know. I met the principal officer in
that company, a fellow by the name of Gragga. I think it's
G-r-a-g-g-a. That's the best I can do for you. That's
phonetically. !

Q All right. How did you first make any contact [

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with any R. G. Hobleman people?

A I think my first contact was with Mr. Gragga. I
think I met him in a social context through Mr. Jameson.

Q And that would have been in the period immediately •
after your retirement sometime, or was it before your
retirement?

A I don't recall. My first memory that I can recall :
is after I retired.

Q Had R. G. Hobleman or any people affiliated with
them done work for the CIA, to your knowledge?

A Not that I know of.

Q And to clarify the record, they could have done
work, and you didn't know about it?

A Right .

Q In a compartmentalization type situation?

A Right.

Q Had they every done work for Clines prior to the
tina that you met Mr. Gragga in a social situation?

A I have no way of knowing that. I mean, I have no ,

way of knowing that. '

Q They became the freight forwarder implemeter for
the EATSCO operation; correct?

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A Yes. I know they did a lot of work together, but
exactly what the nature of their relationship was, and so
forth, I'm not familiar with that.

Q What I'm getting at is, did you know Gragga first, ,
or did Clines know Gragga first?

A That I don't know. I told you I met him — the
best recollection that I have is, I met him through Donald
Jameson . -

Q But your early association with him didn't discover'
the fact that he was a longtime associate or business
associate or even a person that Clines knew?

A No. As I say, my memory of his is, I met him
through Jameson, and that's all I can remember about the guy.

Q Had he ever done any work with Jauneson?

A No, I don't know where they met. Let's see. That's

a long time ago. I'm having trouble dredging this out of my

memory. I just can't remember where they know each other

fro* or even if I knew.

Q All right. 5

1
Did you later become feuniliar with or hear of the j

business name of Air Freight International?

A I'm not familiar with Air Freight International.

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Q They were a subsidiary of R. G. Hobleman in
association with EATSCO.

That doesn't help you at all?

A No. In that period of time, I was not involved
in air freighting anything, so had no reason to be involved
with them, or it's not a name that rings any bells with me.

Q Your consultancy with EATSCO didn't touch on air •
freight possibilities?

A No. All it consisted of was doing basically '
papers for them.

Q Do you have access to those papers now?

A I don't know. I haven't gone back. Maybe I do.
I don ' t know .

Q If you do, could you produce those at a later time
to the committee?

A Well ~

MR. MC KAY: We are already back 5-1/2 years. We I
ar« now talking about going back seven years. I have serious
trouble knowing what any of this has to do with the committee',
mandate . I

If you want to subpoena documents going back
another two years, obviously, we'll have to deal with it, but

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why don't we take this one down, and without my responding to
it, see what else you're asking for.
MR. HOLMES: All right.
BY MR. HOLMES:

Q After this consultancy with EATSCO, you had no
further dealings with Salim?

A No. Basically, I don't recall that even. I'm
having a little trouble putting this into perspective, you
know, the time sequence. I met Salim's brother, who is .an
oil geologist, but I can't remember when that was. I had
some correspondence with him for looking at oil concessions.

Q Would those be the oil concessions that we
previously discussed, the same concessions?

A No. The same concept. The same concept. But
nothing came of that. He was already working for a couple of
other oil companies. I'm trying to think of them. I can't
think of anything else at the moment.

Q Did you ever attend any meetings with any other
p«opl« at all, in which EATSCO business opportunities were
discussed?

A No, not that I recall.

Q Did you ever discuss the business of transporting

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military materiel from the United States to Egypt with Ed
Wilson?

A No, I don't recall having any conversations with
him on that kind of subject.

Q Did you ever discuss it with anybody in his
presence?

A Not that I know of.

Q Was this consultancy with EATSCO your first
association with, any venture dealing with the transport of
military equipment from the United States to Egypt?

A I wasn't dealing with any transport of equipment to
Egypt .

Q EATSCO was?

A As I told you, I did papers for EATSCO. I didn't
have anything to do with the transport of the equipment.

Q I understand that. My question is whether you
had any discussions about that project. I'm trying to get
at when you first found out about this opportunity — this |
business opportunity to transport military materiel from the
United States to Egypt.

MR. MC KAY: You mean EATSCO 's business?

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BY MR. HOLMES:

Q Which became the business of EATSCO.

A I know that at some point in time that Tom Clines
was talking to Hussein Salim about forming a company with
him, and so forth. I vaguely remember that kind of a
discussion, and so forth.

Q Do you know whether there were any other '

individuals that Clines of Salim spoke to with regard to
that opportunity? '

A Not that I can recall.

Q Do you know whether Clines spoke to Erich von
Marbod about that business opportunity at any time?

A I really don't know. I don't have any
recollection of anything like that. I remember Clines
talking eibout trying to get into this kind of a business,
that was basically what he was interested in it. My doing
was to help him get some of these other companies going while;
he want off into another area of activity.

0 Did you hear from any source during the period of
time when Clines was interested in dealing with this
business opportunity, that Ed Wilson was in any way
associated with that venture?

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A No. I don t recall that he was associated with that
venture, no.

Q That same question with regard to Erich von Marbod

A No.

Q Richard Secord?

A Not that I recall. I know that Clines borrowed
some money from Wilson, but that's in the broad context <
of things, but I don't recall the specific venture.

Q And what is your source of information on the-
borrowing of money by Clines from Wilson?

A I heard him talk about it.

Q You heard Clines talk eUiout it?

A Yes.

Q And what was the amount of money?

A I don't recall. It was a fairly substantial
cunount of money, which I know he borrowed from him and
subsequently repaid.

Q Do you have any other sources of information, i
other than Clines? i

A No, not that I can think of at this point.

Q Were you ever present when Clines discussed that

loan with anybody else, for exzunple?

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A No, not that I can recall at the moment, no.
Q When you say it was a fairly substantial amount of
money, does half a million dollars sound —

A It was in hundreds of thousands. I don't remember
how many hundreds of thousands it was, but it was what I
regard as a substantial amount of money.
Q And it was at what time?

MR. MC KAY: That he heard of this from Clines?
MR. HOLMES: Right.

THE WITNESS: It would probably have to be in
1979, somewhere in that time period of 1979-1980.
BY MR. HOLMES:
Q So it was the same time period when you and Clines
were in business together and before you struck out on your
own?

A Right.

Q Well, have we covered EATSC07 Is that your last
asaociation with EATSCO or Salim?

A I don't recall anything else. I think at one
time — 1 have to remember the sequence. I looked at some
trucks. It wasn't for EATSCO. I think Salim was looking at
another opportunity and asked me to look and see if I could

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research what trucks were available on the market. I know
I looked at some trucks. They were GMC trucks manufactured,
maybe, in the United States with Mexico or something, but
nothing ceune of that.

Q The ultimate destination of the trucks was to be
Egypt?

A I don't remember where the ultimate destination
was. It was something he wanted to bid on.

Q Did you have any other business dealings with
Clines, other than what we discussed previously?

A No, not that I can recall.

Q Let's move down to the Bernstein Brothers, and if
you could just sketch for me the relationship with the
Bernstein Brothers.

A Bernstein Brothers is a Colorado sort of
investment company, and I did some work for them in looking
at some issues relative to offshore oil concessions off the
West Coast of Florida.

Q During what period of time was this?

A I don't know. That could have been '79, '80, '81.
Somewhere in that period.

Q Is that the only business you have done with

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Bernstein Brothers?

A yes. That's essentially it. I think I wrote some
written papers for it. There were some drop copies of papers
on oil-related matters.

Q Would this be, in general, your oil intelligence I
type service?

A Yes. I think at one time, he was interested in ,

Guatemala oil potential, and I think that's when Guatemala wais

i
coming on stream. !

MR. HOLMES: Would you like to?

EXAMINATION

BY MR. WOODCOCK:

Q Mr. Shackley, again, I'm Tim Woodcock, also with

the Senate Committee.

Mr. Shackley, when did you become ADOO, Associate

Deputy Director of Operations? ,

A I think in May or June of 1976.

Q Now, in that capacity, did you have much experience

I think, then, the relatively new law governing ;

findings, covert action findings?

A You know, I know when the findings ceune in. Once

the rules came in, basically, if you had anything that

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appeared to be in that particular area, that was a whole new .
art form that was being crafted.

As I recall, that went through a number of changes
over the years as to what was to be included. But I wouldn't
want to say my knowledge of the findings started when I became
ADDO.

Q I guess, in that capacity, you had some experience
with findings, the findings process?

A Right .

Q And it was in an evolutionary stage at that time?

A Right, as far as I recollect.

Q Let me ask you this. Really, what I'm asking at
this point are policy questions based on your experience as
a former ADOO. In the course of this investigation, we have
come across instances in which findings have been entered to
cover activity that has already occurred, that is, covert
action activity that has already occurred.

Has there anything like that in your experience
a^QlTOO?

A I can't recall any. No, I don't think so.

Wait a minute. Once you went from one procedure
to anyother, I think the first series of findings that went

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in covered what had gone before, because this was a new art
form. After that art form started, I don't recall any that
were ex post facto approval.

Q Now, based again on your experience as ADDO, do
you have a feeling or opinion as to the advisibility of such i
procedure, basically, a ratification of prior actions —
covert actions? I

A I could only see that basically hapening in some '
dire emergency, where something might happen, where some
event would come up and the director would go talk to the
president, and it would be a short, fast-breaking kind of
situation. But then in a matter of days, you would catch
up with it.

Q You never actually had that experience?

A No. I mean, you know, if you ask me a theoretical
question, could it happen, or could there be a set of
circumstances in which it would be applicable, that would be i
tim only time that I could envision.

Q The statute, as currently drawn, does not appear j
to provide any leeway for that kind of event.

Do you have any feeling as to whether it ought to
be drafted to provide for such a contingency?

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A Well, you know, I think foreign policy events

sometimes are fast-breaking, and it seems to me, in order to -

have some short-term basis for taking action, if it's

appropriately staffed. In other words, I could see a

situation developing where the Congress is not in session, '

and you don't want to get on an open phone to talk to

somebody across the United States, and the director goes to -

the president, gets approval from him and has to do something

I
in 24 or 48 hours, and it's necessary to put a courier on

the airplane and send a briefer to brief whoever is supposed ;

to be briefed. I see it as a very short-term kind of thing. '

Q Let me, along the same line, in the event that
you're faced with a fast-breeUcing series of events that
requires a covert action response, do you have an opinion as
to whether the covert action findings should always be in
writing or sometimes not in writing?

A Given the way things work, I see no reason why it .
caajt be camnitted to writing, and that's generally the
waip It's been dealt with. I knew of no verbal finding. I'm;
not aware of one.

Q Given that there is a finding process — let me
rephrase that.

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A As ADDO, how did you view the written finding
system? Did you view that as basically a jursidictional
mandate for you that you could operate within the permises
of the finding and not otherwise?

How did you interpret the finding?

A I saw the finding as creating broad parameters.
I certainly didn't look at it as being something that required
the dotting of every "i" and the crossing of every "t." It
set up a concept in which you might engage in certain
action.

Q Would it be the base document for those actions?
For example, if you contemplated a particular action, would
it be your practice to refer back to the finding to determine
if it is something contemplated by the finding?

A No. I think your base documents would be something
that would be approved by, you know, whatever period of time
you're dealing with, the 40 Committee, the 303 committee.
Whatever historical period of time, because those kept
changing.

Your basic policy document really came from that {
kind of presentation.

Then the coordination with the Congress and the

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sanctioning of it. by the Congress came in your finding, but
your more detailed document would have been the document that
you would use for policy purposes. Either one of these
approval groups.

Q The approval group process would precede the
finding; is that correct?

A Yes. In most cases. You know, in an emergency,
maybe the two would be going parallel and one would get
ahead of the other, depending on who was in town and the
ability of a meeting, you know, getting all the principals
together for a meeting.

Q And then in the ordinary course, outside of the
exceptional circumstances, the finding would have contemplated
what was already contemplated by the 40 group or whatever?

A It would be approved by it.

Q Yes. So you, as AODO, having had some participation
in that process, would know both the underlying, detailed
discussion that would have occurred in committee and then ^
also have the knowledge of the findings; is that correct?

A That would be the normal proviso. Certainly,
during my time, that would have been the normal proviso. In

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Other words, if I didn't prepare the papers, the DOO prepared
them when he came back and would say, you know, "Here's what
has happened." But a lot depends on the rapport between the
two people and the working and would depend to a large extent
on the director, at the time. Maybe it would be a director —
there wasn't one during my time, but maybe there would be a
director who would want to compartment something in a special
way.

Q Let me ask you the question a little bit differently.
Assuming that a covert action has been authorized
and a particular course of action was contemplated, where
would you have gone to determine that what you were
contemplating was, in fact, authorized?

A You mean if I had sc^ne doubts?

Q Correct.

A Well, in my case, if I had any doubts, I would have
gone to the director.

Q And then, in your experience, where would the

diractor go to get confirmation, if he had doubys? Would he

go back to the committee? I

I
A No, 1 think the inclination — that's a very hard !

one to deal with, because I'm not sure what has gone before. |

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Let me try to recast this and see if we're talking about the
same language.

Q Please do.

A Let's say we had put in something, a proposal to
the 40 Committee, because I don't know what period of time
you're talking about. Let's just say the 40 committee. And

at the same time you had put in a porposal as soon as this wa^

approved by the 40 Committee, and you had gotten a finding,
so that you had everything properly coordinated within the
governmental structure .

Then if I were sitting down here as ADDO and the
item came up which caused me to question whether this was in
this authority, I would first go to the director. The director,
if he had some qualms about it, would undoubtedly go to the
president or to the National Security Adviser. A lot depends
on the personal relationship between the people at the time.

I mean, there have been times when directors and .
National Security Advisers have not had the best of rapport, -
and there are other times when they have had good rapport, <
and that would be the place for them to go. That's where you
would start the process of clarification. It could be a
matter of minutes before they could clarify it; it could be a

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day. But I wouldn't ejtpect it to be more than a day, because,
obviously, it would be something that would be pressing. It
would be something that would be troublesome to the ADDO or
the DDO.

Q As ADDO, did you have routine access to presidential
findings?

A Yes. During the time I was there I had a free
exchange with the fellow that I worked with, and I knew of '
no action of this type that I wasn't aware of. I mean, I
have not been aware of each and every detail, but generally,
I was aware of what was going on, and we were interchangeable.
The other fellow travelex extensively, and when he was gone,
I ran the shop.

Q Who was the DDO, when you were ADDO?

A Bill Welles.

Q Do you know of any insatance when a finding was

not provided to the CIA? That is, not physically provided?

I
A I have no recollection of such a thing. I mean,

wban a finding was signed off on, you know, it always came

back.

Q Came back to the CIA?

Right.

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Q Where it could be checked by you, if need be, or
anyone else?

A Yes. I would be available to the director, let's
say. The DDO of AODO would be available to the Office of
General Counsel.

Q Right. Let me ask you this. We have come across,
in our experience in this investigation, an instance in which
a finding was signed, and the original was kept, and that
original was kept at the NSC. No copy was transmitted to ,
CIA for nearly a year? '

Would you have an opinion, based on your experience
as AODO, as to the suitability of that kind of a procedure?

A Well, I'd say it's unusual.

Q How about good or bad?

A Well, I think you need to have a straight flow
of paper back and forth. I would expect we would have gotten
a copy of the paper, and I would looked for it.

Q And you never had any experience where someone
wittkheld a paper?

A No, I don't ever recall any problems with that
aspect of the procedures.

Q In your experience, in the event that a covert

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( action, at some point, came to light, do you know whether
you or the CIA would have used the existence of the finding
as providing some protection for the Agency?

A I think you would want to know that if it fell in
that category, you would want to know that it has been
approved by the 40 committee and that it had been approved
by the finding, so you could establish that this was
appropriately coordinated, and it was a government program.
Q And authorized?
A Yes.

Q And by the converse, in the event that a coveirt
action was attributed to either our government or the CIA,
in particular, that, in fact, we had nothing to do with,
would the nonexistence of a finding then argue that, in fact,
at least from among our leadership, we were not associated
with it?

A I think, in all probability, that would be the
way people would approach it. If you don't have it, it's
not there. I think that would be the general view.

Going back to this thing, it's also possible that
the legislative counsel at various times play different
roles, and they would have been, in some cases, involved in

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arranging meetings in relationship to the finding for the
director or for others to brief the congressional committee,
so you would have another component of the Agency involved.

Q As a matter of course, do you know who would have
been consulted before a finding would have been issued during
your tenure as ADDO?

I'm speaking in terms of the Attorney General or
Secretary of State. Would those people automatically have
been consulted?

A They would have been consulted in the context of,
say, the 40 Committee mechanism, because they are senior
representatives and would be sitting in at the 40 Committee.
So that individual, the senior State person, would go back,
and it was incumbent upon him to make sure the Secretary of
State was appropriately briefed and concurred.

Q Do you know of an instance during your tenure as
ADDO, when a finding did not go to the 40 Committee?

A I can't recall one. I mean, I don't have any
memory of any such thing.

Q Let me ask you a question on the concept of [

!
plausible deniability. 1

First, if you would, could you describe for me

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how you perceive the concept of plausible deniability.

A Well, the concept of plausible denial has gone a

number of mutations over the years. Its initial presentation

probably in the fifties, was that you wanted to create i

covert action in a way that the U.S. government and the

senior policymaUcer, i.e., the president, could say that he

was unaware of that particular action and had it structured j

j
in such a way thatyou had policy approval for the action '

within the U.S. government, but you didn't have a tangible !

audit trail leading to the president. That, in fact, is

what was inherent in such mechanisms as, let's say, the 40

Committee, which we used generically here. That is, it would

be approved by the senior policymaking body, that's where

the approval came from, and it stopped, essentially, there.

Although they, in turn, might have briefed the president.

But the trail led to the 40 Committee.

Q But, in fact, under that set of circumstances,

didn't that assume that at some point the president was

made aware of the process?

A Yes. I think one would have to assume the
president was made aware. I think that was a fact, that

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the president was made aware, but it was this concept of
plausible denial . I think after you had the investigatations
essentially, in the seventies, the concept of plausible
denial went by the wayside, because the finding mechanism
required the president to sign it. Therefore, once the
president signed a finding, you had an audit trail leading
to the top policymaker in the United States government and :
plausible denial was no longer plausible.

Q Right. There was some testimony — I don't know
whether you heard it — that seemed to revive the concept of
plausible denial, for aspects of the Iran operation, and I
believe it was Admiral Poindexter espoused his view of
plausible denial as essentially encompassing a process
whereby the president was not informed at all of covert
action.

Was that ever a live theory within your experience?

Q Not in my time . ,

Q I mean, in fact, that's absolutely absolute

deniability, is it not? j

A Right .

Q Not plausible, as a fact?
A Right. 1 don't see how that can function, if you

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have so many other aspects — budgetary aspects, manpower
aspects, you know, interfacing with cover, and so forth. I
don't see how that could transpire.

Q But that expression, to the extent it assumes
the president is not told at all , did not comport with your
understanding of how plausible denial was?

A No. As I say, there may have been a couple of
minor shadings in between these two very severe definitions ,
but the benchmark that I was seeing would be the 50 to 70,
whatever it was, 72, to the Church Committee period, and
the Pike Committee created another watershed, where you had
this proceeding, and after that you had a trail that would
lead directly to the president.

Q There was a rule within CIA — I'm going to show
you a copy of it.

MR. WOODCOCK: Let me just have it marked 8.

(Shackley Deposition Exhibit 8
identified.)
BY MR. WOODCOCK:

Q Mr. Shackley, I'm going to show you what has been
marked as Deposition Exhibit No. 8, and it is taken from
the CIA Regulation Book, and I have put a green bracket

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around the letter "H," which reads:

"Support to the White House office."
That reads as follows:

"Any support requested by or extended to
the White House office, excluding the
production and dissemination of foreign
intelligence, must have the prior
approval of the director."
Are you feuniliar with that rule?
A I don't recall it, but let's see if I can see when
it's dated. It looks like it's dated 1978.

No, I don't recall this rule off the top of my
head, but it's the kind of embodiment of what the procedures

In other words, nobody would go to the White House
or be in touch with the National Security Adviser without
having some coordination, internally, and having the approval
of the director.

In a progreunmatic sense, you might have approval ,
from the director, yes, we're going to be talking about I
paramilitary operations in Laos, let's say. There might
have been a historical period when somebody might have said.

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yes, we're going to be talking about those kinds of
operations, and here's what we're going to be dealing with,
and you get approval frotn the director.

Q And so that was before the embodiment of this
rule?

A Yes, I just don't happen to recall that
particular rule.

Q Let me ask you this, Mr. Shackley.

Based on what you have just said, when you were
ADDO, if a call had come into, say, your office, directly
from an NSC staff person saying the National Security
Adviser has told me that he wants to use the following
resources of CIA for the following purposes, would you have
felt that you would have been in a position to say, okay, or
would you have had to go beyond that to seek approval for
that request within the CIA?

A Well, if it was within the scope of an approved
program. If it was not within t he scope of an approved
program, I would not have felt that I could do that on my
own.

Q Now, again, in your experience, first, did you
ever have that kind of experience?

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A No, I don't 2ver recall having anything like that.

Q Second, if you had, what would have been your
procedure to get the proper authority to move ahead on that
request?

A Well, if the DDO was in town, I would have called
him and said, "You know, I don't know why you didn't get
this call. I'm home, you're out. Do you know anything that
I don't?" It might have been during the course of the day
I had not seen him, the way the schedule went or something.

I might have been up on the Hill testifying on
something, and he might have been dealing with foreign
liaison or something, and we just didn't meet by the end of
the day. "What do you know that I don't know."

That would have been my first reaction. If he said
he didn't know anything, then we would have agreed between
us, who was going to take the next step, i.e., I probably
would have taken it, because the call came to me, and my j
next step would have been to call the director. Or if the
director wasn't in town, call the acting director.

Q And it would have gone to either one or the other
for approval before you would have taken steps?

A Yes.

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Q In your experience, has the NSC itself ever
performed covert operations?

A None that I'm aware of.

Q And the CIA was seen as the primary implementer
or covert operations; is that correct?

A That's correct.

Q And I gather, in some circumstances, purely
military, perhaps only the military would implement it; is
that correct? Did you ever have that experience?

A On a covert action?

Q Right. Ever?

A I think I can recall the military being given
action responsibility to implement something, but they, too,
have a coordination mechanism.

Q With the CIA?

A With the CIA and depending on the nature of the
program, it could have been a military program put into the
4 0 Committee format, approved by the 40 Committee and the
finding found, but the instrxment for implementation would
be the military.

Q Let me back up to the subject of getting approval
or getting a request from the NSC to take action. Let me

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get down to some specifics.

If an NSC staffer called you to enlist your
support to gain, for example, flight clearances in foreign
countries for a flight, would that be something you would i
deal with and take up the line?

A If it had nothing to do with an approved, you know,
activity — you always have to structure this. If it were
an ongoing program, I would have to make a judgment as to ]
whether that was within the tolerance threshold of the '
authority that I had. And if it were an approved program,
I would have to judge it at that point in time, as to what
I wanted to do. 12:00 o'clock at night, you know, the
director is out of town, and I would know he's out of town,
and the acting director is at some conference or something,
I would have to sort of judge all those things amd then make
a decision within the scope of the approved program. If it '
was not an approved program, it would be the kind of thing |
that I would have to go to somebody else and say, "Hey,
this is something I don't know anything about.

"This is an unusual requirement. It's out of the
scope of our charter, and what do you know?"

Q So, before you began calling your chiefs of

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Station to prepare whatever flight clearances, y^u'd have to
go through the process you just described?

A Yes.

Q Now what you have just testified to — and correct
me, if I'm wrong, I think that is assuming that you would
feel an obligation to question the NSC staffer as to what
precisely it was he was trying to accomplish?

A Yes, I think I would ask a question, and he might '
say this is some approved program, the director knows about
it, if you don't. This is the help that I need, or something
like that. And I'd say, fine, I got to check it out.

Q Right. In other words, get the director's
approval? You would have to check it out?

A Right.

Q You wouldn't rest on his word alone; you would
let the director know about it, then do it?

A It depends on the interrelationships people have
with the memagement. I mean, the time I was there, I felt

confortable in being able to call the director at any time

of day or night and say, hey, I got a problem, and here's |

. .1
the issue and here are my concerns or here s my recommendatipn.

Q Let me Jbid another layer to this hypothetical.

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Let ' s assume that you go ahead and you ask the
NSC staffer what it is that he is trying to accomplish, and
he gives you a story which you suspect to be a cover story;

would you feel satisfied to take the cover story, with your

suspicions, to the director, or would you try to penetrate j
the cover story with the staffer?

A You know, that's a hard one to answer. I don't

know. A lot would depend. My own inclination would be thati

i
I don't work for the NSC staffer, I work for the director,

and therefore, if I'm going to err on the side, you know, o£

being on one side or the other, I got to pay attention to

what the director's equity is, so I would be inclined to

go to the director and say, look, I don't know anything

about this . More ' s a rec[uest . Yes , I can implement it ,

but I don't know anything 2d>out it, and your name is being

quoted here as having knowledge of it or approval of it or;

something. So what's the word, boss? |

Q All right. Let's leave the hypothetical director;

i
approval out of it and just go to the question of whether

you would feel obligated to pierce that cover story.

Let's assume he has not represented the director

has approved the operation.

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A I don't think I'd necessarily be inclined, if he

said, "Look, I want to do X, Y or Z, it's not within an

approved program, I have no knowledge of this before," and

he says, the National Security Adviser or somebody wants to

do it, I'd say, "Gee, that doesn't make an awful lot of

sense to me. What is it about?" And he says, "That's all

I can tell you, that's all I'm authorized to tell you."

I
I'd say, "Well, I got to get back to you. I'm !

not authorized to do it." ;

Q Right. So I gather — let me fashion a response,
and you tell me if I'm wrong. At a minimum, you would feel
obligated to go to the director and say, "I have been
called by the NSC staffer. They have proposed the following.
They have given the following rationale, and you should
know, I suspect it's a rationale, a cover."

A Yes. Or I'm uncomfortable, or it doesn't make
sense to me or something like that. A lot depends on who
is in to%m. If the DDO was in town, I would call him !

first.

Q But either way, it would be the same discussion? {

A Either way, the seune flow.

Q And it would be up to the person to make the

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judgment as to whether to pierce the story or not?

A Right.

Q Let me get back to the NSC, as a performer of

operations, and again, I'm asking you td draw on your '

experience as a member of the CIA.

In your opinion, is the NSC an appropriate

institution to perform covert operations?

I
A No, I don't see them as an implementer of |

operations.

Q Now, why do you say that?

A Well, basically, they don't have the structure
to do that, and by and Icirge, they don't have the experience
to do it. In other words, most of the people who are
assigned to the NSC staff have substantive positions, you
know, go into these jobs either as political appointees or
come front the academic or economic community or business.

They're in there for two or three years, four
years, amd they are gone. And they don't have anybody of .
experience. Or they are people that come from other agenciesj.
State Depairtment, and so forth, where they may be top notch
2uiaiysts in a particular area or region and familiar with
policy but aren't familiar with program implementation.

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I just don't see the talent being there for it.

Q Do you think it should be given the capability
to perform covert operations?

A No, as a personal opinion, no.

Q Again, why?

A Because 1 don't think we have the depth of skill
and experience to permit the U.S. government to staff those
kind of functions adequately by having multiple repositories
to implement those kind of programs.

Q In effect, a second small CIA?

A Yes. I don't see that we have the talent. And
this kind of talent is not developed in a short period of
time, and the opportunities for developing talent of this
kind are significantly decreased.

Let me make that point. It is a troublesome
point. I think, if you took somebody who came in to the
CIA up to the mid- '50s, they entered prior to '55, '56,
probably in two yeairs' time or three years' time in the
fiald, they acquired more experience than the fellow
entering, let's say, in the '80s will in ten years.

Q Why do you say that? That's an interesting

coRonent .

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A Because that's why I'm making it. Because the
opportunities aren't there. The political sensitivies are
different.

Let me use an example — two examples — to perhaps,
make my point. i

Take Germany. Before the wall went up in

Germany, in Berlin, there were thousands of people flowing |

i
across the border daily, so there was a lot of opportunity [

i
to get exposure and experience in pursuing programs, because ;

there was just this vast array of people coming out there,

which was a potential pool within which to work. After the

wall went up, that decreased, and therefore, a young officer

coming out has to wait months before he ever gets his chance

to even pursue one action.

In the earlier days, the guy had trouble deciding

which of the ten good things was he going to pursue in the

course of a day. ^

Hong Kong is the same thing. The flow of people

i
coning out of China was great at one point in time, and then

it was closed off.

Q And I gather that was generally true in almost

all locations, and it is today?

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A Yes. And also the political sensitivities are much:
tighter in a lot of places around the world, where a mistake
is much more costly to the United States, so the young
officer coming in now has less opportunity to gain experience.

Q The CIA, in that period, too, had a pool in that \
period, in particular, I think, from Europe, of people who
were expatriates from European countries and were enlisted in i
the CIA or OSS, who were culturally, I think, more sympathetic
to the countries in which they were stationed than it is '
today; is that your experience?

A No. I think what you had out of that is a greater
reservoir of language skills and cultural understanding, but
not necessarily sympathy for the countries that they were
working in.

Q Well, I guess that's a bad choice of words. A
greater understanding. Let me put it that way.

A They understood the environment in which they were ,

working, and they had greater language skills.

Q That's a natural process, as people get old, older
that they were unable to reap the circumstances under which
we would have that manpower reservoir of persons from other
countries coning into the CIA.

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In your experience, at the time you were leaving,
was the CIA successfully addressing this debriefing of, say,
native language speakers in its ranks?

A Yes. Attempts were being made to do that. There j
were various programs which, in part, eliminated some of
that, because you had a different managerial approach. The
approach came in at one point in time in which you had to
look at the young officer who had to go up or out, in
essence, whereas, in this business, there are a lot of
people who may have acquired, for whatever reason, very good
language skills and area knowledge and should be left in a
particular area. Not everybody has to come in as a junior
officer and aspire to be a director.

In other words, a guy can come in and have a very
honorable, productive, satisfying career and to come in as
a junior officer trainee and, you know, retire as equivalent
of a full colonel in the Army, and you know, be the greatest;
expert on Fremce or Pakistan or whatever area — Indonesia
or Southeast Asia or Africa. j

Q You just mentioned a difference in managerial {
philosophy. That, I gather, has resulted in shifting people
around in fair amounts; is that the idea?

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A No, it's also this idea that you've got to have a
throughput in an even cone in all age grade activities, and
so forth.

Q I guess I'm not following you. What are you
describing there?

A If you take the total personnel and make a chart,
you can divided your personnel by grade and age, and so
let's say you have an X number of GS-12s, and then you have
so many, and you have a throughput kind of thing. You start
off with a very large base here, and the higher the grades
are, the lower the numbers are. All right.

There was a theory of management put in by one
group that you had to have this large base and everybody had
to be moved along on an up or out kind of proposition,
almost like the military structure.
Q When did this come in?

A This came in in probably about '77, '78, somewhere
in there.

Q During the Turner years?
A Well, you came to that conclusion. I'm not lookincf
to be —

Q I'm not assigning it directly to him. He would

260

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have been director at that point?

A He would have been the director at that time,
I'm not looking for a polemical discussion.

Q I'm just trying to place it in time.

A Others don't have that seune theory. There's a
theory that you bring people in and you find that an
individual, let's say, is the son of a missionary, his !
father has served as a missionary in Korea, and he's learned.
Korean, and he's got to American University to study Korean, '
and gone to one of these area study progreuns, and so forth,
and speaks fluent Korean, and he's interested in that area,
then you might want to use him in the context of the Korean
situation for a long period of time.

He's got a broad career, but perhaps the
cap on that career is, he would get to be a GS-15, but
b«c«use he gets to be a GS-15 at age 40 and doesn't go any
further, it doesn't mean at 45, you should retire him,
because he has no aspirations at being director, he's not
director material, but he's a hell of a good man for what
he does . He ' s got area knowledge , language interests , and

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so forth, and these are the differences.

So we have lost a lot of skills.

Q Do you know whether the cone philosophy that you
just described is still in vogue today?

A I have no idea. I have lost all contact.

Q We have, in the course of this investigation,
come across what people tell us is an unusual situation,
in which a national intelligence officer, in effect, acted
as a case agent for Manucher Ghorbanifar.

Do you recall, in your experience, a national
intelligence officer ever taking on those kinds of
responsibilities?

A Being a case officer?

Q Right.

A -No, I don't recall that ever happening, no.

Q 1 No, granted that you had, I gather, one day in
which you met with Ghorbanifar, November 20, '84, do you
have an opinion, based on that meeting, whether he was an
individual that you would have run as an agent or not, and,
if so, do you have an opinion as to how you might have run a
person like Ghorbanifar?

A Well, if you will go back to my memos, you will

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see that in several places I have said in those memos that
he would, a) be a different person to manage; that whoever
managed him r;«»rtainly had to have certain talents and certain
skills, and I raised that, I think, in both memos that I
wrote, as a cautionary note, because he is a complicated '
man, and I envisioned difficulties from dealing with this
guy, and I said that in those memos, and I think it's very i
clear, and I think if I had been trying to work with him,
I would have used somebody who knew him as an intermediary.
And I don't know what else what was available, but just in
the short time I was involved, I would have probably used
somebody like^^^Hf^^^^^^Hto try to work with him.
I think I would have used him much more as a
cutout or filter.

Q "Used"?

^^^^^^^^^^^^H Somebody like
And maybe I would have used^^^^^^^^^Vor somebody like
that, who you had more confidence in and had more of a
stake in the United States, and interest and so forth.

Q Let me ask you another question, this one, coming
to you out of the blue. Would you have an opinion on
whether the position of inspector general at CIA should be

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confirmed by the Senate?

MR. MC KAY: Have you ever had an opinion before
this moment?

THE WITNESS; No, I thought about it before. No, :
I don't think he should be approved by the Senate. '

BY MR. WCX)DCOCK:

Q And why not?

A I think that would tend to politicize the '
position, and you find a lot of people trying to build
careers are perhaps seeking the kind of congressional
exposure, which may not be good for an institution.

Q How do you see, absent some kind of congressional
involvment in the IG, ensuring that the Office of Inspector
General, CIA, is functioning properly and aggressively?

A Well, I think you could do that with program
reviews; that is, the Office of Management and Budget, when
they're doing their annual program review, they can certainly
focus on that kind of a problem. I mean, you can look at

the quality of the person being assigned, the number of i

i
people being assigned. You can look at the dollars which

are being allocated to the budget and the Office of

Management and Budget does have the ability to review

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a) what has transpired in the past fiscal year, in terms of
programs; what have they looked at and what have you got
on your plate for the coming fiscal year and what do you
know about the problems that you're working on. Their
continuing interest.

One problem might well be this language problem.
In other words, we understand it's a problem, what are you,
the Inspector General, going to do about this? Not just
in regard to, let's say, the DDO; what are you going to do
about it in terms of looking out for the Agency as a whole?
What about DDI? What are their language skills at this
point in time?

Q When you were at CIA — let me limit it just to
your experience as ADDO.

When you were ADDO, was the inspector general
position seen to be a position that was a step up on the
ladder, a place from which people would go on to bigger and ,
better things?

A Well, you have to answer that in two different j
ways. If you're saying, was it seen by somebody in the DDO
as a stepping stone to a larger job, I would say no. If
you're looking at some other component, it was conceivably

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a platform from which to go to bigger and better things.

Q And when you say "some other component"?

A Well, let's say something like Deputy Director for

Administration. I think somebody could see themselves moving;

from a position in the Director of Administration to be '

Inspector General, and a couple of years later, perhaps come

back to be the Deputy Director or Controller or the head of i

Administration or some other job that was more important, in ■

terms of resource controls.

Q In your opinion, was there anything wrong with the
idea not being a stepping stone for someone?

A No. Because it's quite a visible position. If

somebody wanted to go back overseas again, it carried a

certain eunount of ballast by having been the Inspector

General. You get to be known throughout Washington,

throughout a lot of parts of the government, and then it's

very hard to suddenly reappear, you know, ir

land be the station chief, as your twilight assignment :
I I

for your career .

Q Isn't it also a problem, unless you come out of

the DO, it's pretty difficult to investigate the DO?

A No, I don't think so.

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Q The DO isn't something unto itself, in many
respects?

A No. I don;t see that, because the element —
basic element for conducting investigations is access to
the personnel, money, and program, and I think if you have
the access to those, it's fairly well established.

Q Well, isn't it also, if you're going to conduct
an effective investigation, the capacity to have some
rapport with the people you're investigating?

A Yes. That's a factor, but I guess if you look
at that on a scale of 100, the rapport is probably less
important than access to the program records and the
financial records and the personnel records.

Q We came across, in our investigation, an instance
in which DEA worked with CIA on a project — the Drug
Enforcement Adminstration . When you were ADDO^ I guess it
would have been called DEA at that point too — what was
their relationship with CIA?

A Well, it was still evolving at that particular
point in time, because you have to go back. I forget what
DEA was called then.

Q It was Bureau of Narcotics and Dangerous Drugs?

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A Drug Control, I guess.

Q And before that, it was the Federal Bureau of
Narcotics.

A You know, as it evolved. Ajd it was still
evolving in my time, that is, the relationship and the scope.
of activity, because that was a new requirement, really,
and initially when the narcotics problem came into focus, i
the Agency's primary responsibility was collection of
intelligence; who were these guys? What were they doing,
and so forth? Then later, came a point in time when there
was more cooperation, in terms of trying to obtain

And therefore, there was a greater exchange of
operational information with the Drug Enforcement Agency.
So it was still evolving during my time.

Q Had it evolved to the point where the DEA would
join in an operation with CIA? Their agents actively
involved?

A I can't reall. You better give me a better
definition of what you see as a joint operation. I think
maybe I can tell you. I

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Q Are you familiar with the Third Agency Rule?

A Yes .

Q Could you articulate that for me, please.

A Well, the Third Agency Rule is that the CIA obtains
information from, let's say, the FBI. It is not to pass that
information to DEA. It was not coordinating it.

Q In other words, notifying FBI?

A No. You could not get information from the FBI and
have that information come to the CIA, and the CIA willy-nilly
then give that to DEA.

Q Now, that process of notifying FBI, is that
actually a process of getting their approval?

A Right.

Q It's not simply notice; you actually have to
approve it; is that correct? /

A You have to discuss it with them, and a lot would
depend on what operational , and you have to get their
approval .

Q Let me share with you one of the frustrations of
an investigation. We have found that the Third Agency Rule
applies to Congress as well. We run into instances where
we can get, basically, composite documents with the CIA,

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blanking out what maybe the FBI has told us, and the FBI
giving us the same document in their folder, blanking out
what the CIA has told them. Together, we have a complete
picture.

That has struck at least some of us as having some
limited logic.

Would you have any position on how the Third
Agency Rule might apply to Congress?

A Well, let me say that I think that the Third,
Agency Rule is a good rule. It's a sound rule in practice,
in terms of dealing among the intelligence and security
agencies a) within the government, within the U.S.
government and b) with foreign services.

So, having started with that as a premise, you
have the special problem, in terms of dealing with the
Congress.

Q Let ' 8 leave ^^^^^^^^^^^^^^^^^^^^^^^^^^^^H

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^■but say
tbm government.

/A I think you got a special case, insofar as the

Congress is concerned. I haven't really given that any
thought as to how one might work around it. Insofar as

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the relationship between the agencies within the government
is concerned, I think the Third Agency Rule is good and should
be adhered to, because there may be something that, when the
FBI gave you this information, they gave you perfectly sound ■
information, but how that information is acquired or was
acquired and what jeopardy the source of the acquisition
might be placed in by being given further dissemination to
SCTnebody who would use it in a different form, can only be
made by that agency.

And if you're going to have a free flow of
information, I think you have to honor the Third Agency Rule.
How you solve that for relations with the Congress, you do
have a special problem. I don't have an instant answer. I
hadn't thought about it.

Q I just have one more line of questions for you.
The CIA has its own security clearance process;
is that right? '

A You mean for hiring peop}j^? ^

Q Let's say, for a person who would participate in j
a covert action.

A Yes, there's a clearance procedure for that. It's
self-generator procedure.

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Q And am I right that a person who, say, has a
security clearance with the Department of Defense, would
not, ipso facto, have a security clearance with CIA to
participate in a covert action? ■

A That's generally correct; yes. i

Q In other words, the CIA would also clear that

person into its operation?

i
A Depending on what kind of a role they were playing,!

and so forth.

Q And do you think that's sound practice?

A Yes.

Q Prudent?

A Yes. You have to know, I think, depending on the

role they're going to play. That's why I came back to, you

have to define the level of participation; then, how much

time you're going to spend on clearing the person.

MR. WOODCOCK: Okay. That concludes the questions

I have for the moment.

THE WITNESS: Can we take a break?

(Recess.)

BY MR. WOODCOCK:

Q Mr. Shackley, you recall when we were last together

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I asked you some questions about Albert Hakim and your

circulating him within the CIA back in the 1970s as a possible

sort of assistant to the Agency.

What I'd like to do, if I could, with you, is to

show you a series of documents here which we have received

from CIA. First let me ask you to read this document, which

I will ask the reporter to mark as Deposition Exhibit No. 9.

j
(Shackley Deposition Exhibit 9 ;

identified.) I

MR. WOODCOCK: I'll describe it for you the record.

It's a memorandum for record, dated August 5, i976, and

signed on the back, "Theodore G. Shackley, Associate Deputy

Director for Operations.

BY MR. WOODCOCK:

Q Now Mr. Shackley, if you will take a moment to

read this, it's a four-page memorandum, single space, so

it might take a little time, but I would ask you to take a

moment and read it carefully.

(A pause.)

First, Mr. Shackley, have you had an opportunity

to review Deposition Exhibit No. 9?

A Yes. I have read that menorandum.

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Q Before we get into the substance of it, is that
your signature on the last page, page 4?

A Yes, That's what it looks like.

Q And I gather that's a memorandum that you yourself ;
prepared; is that correct?

A Yes. That's clearly the kind of thing I owuld have

done, and I think it's a reasonably accurate thing of what I

I told you I did do the other day. j

Q Right Now, let me go through the memorandum with

you, if I may, because there are some points in it that I'd

like to see if you can expand on.

The memorandum gives under the heading "Background,*

on the first page, there's a reference in the first sentence

there that during the May to August 1976 time period, you

had collected "numerous references" on Albert Hakim.

As you recall, what were these references you

were picking up during that period of time? j

A You know, I don't really know. This is a long

time ago. This is 1976. I know that's what it says, but ;

I
those words don't bring any specific details. Obviously,

whatever I had, I wrote in there at the time, given the

way this unfolds. But I can't recall what that had

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reference to.

Q You were introduced, I think you testified, to
Mr. Hakim by Ed Wilson; is that correct?

A Yes, I was.

Q Was Wilson the source of these references, do you
recall?

A I know he introduced me to him, but that's my
main recollection of the thing.

Q Let me ask you this, a different kind of question. '
Your present inability to recall would suggest
that it might have been prudent to set out the numerous
references at the time.

Would that be the ordinary thing to do, when you're
putting a memo like this together, to say "I have had
references on so-and-so from the following sources?"

A No. That would be sort of a judgment call,
depending on what you saw coming out of this particular
thing, as I think I told you the other day, and this
c«rtainly reaffirms my own memory of the thing. I had a ■
meeting, I came back, ajid I wrote up what I thought was a !
fulsome report and put it into the system.

Q Now, there ' s also a reference — let me go down

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the page here. We're still on page 1, under the heading ;

of "Commercial Structure."

A Right . i

Q It says "Mr. Hakim is involved in a number cf

commercial enterprises."

Do you recall what series of commercial enterprises

would have been? |

I
i
MR. MC KAY: You mean beyond what is mentioned?

MR. WOODCOCK: Yes. In addition to anything I

that's mentioned. !

THE WITNESS: Let me just reread that again.

(A pause.) '

THE WITNESS: No. The way it's written, I assume

that he has a number of commercial enterprises, and it

goes on to discuss two of them here. |

BY MR. WOODCOCK:

Q ' Do you recall whether there would have been any |

that you would have known of, using that term, that you

didn't put down? I

A No. I wouldn't have thought so. I just have no

way of dredging that out.

Q Let me ask, if you would turn to page 2 of

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Exhibit 9, |Under "Type of Business."

The first sentence there, you say "Mr. Hakim has
let it be known that he is currently in the process of
selling the RDJ-9000 security system of Stanford Technology
Corporation to Iran."

When you say, "Let it me know," do you recall
whether that's something he's telling you, or is this
coming to you from another source?

A The way this is written, I assume I got it from
him, that he said that that's what he was doing.

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Q Now, dropping down to number 2, the first
sentence there.

"Mr. Shackley's contacts have indicated
Mr. Hakim is quite anxious to play a
pivotal role in the Iranian purchase of
American technology."
What contacts are we talking about? Do you
recall?

A No, I don't, but I assume that that's probably
what came out of the discussions with Wilson. That's
certainly one of them. But I don't know. It's plural,
more than one. That's the only one that comes to mind at

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this point in time.

Q Let me put this for this particular time period.
Is there anyone else that you associate with
Mr. Hakim at this point, other than Ed Wilson?

A There obviously must have been somebody else I
was talking to, because I used the plural here, but I can't
~ nothing comes to mind. I met an awful lot of people all
over the world, and it's hard to put this — I mean, this
refreshes my memory, and I'm surprised that my memory was
as accurate at it turned out to be.

Q Let me ask you about a phrase that you have
employed in paragraph number 2, on page 2, the one on
"Assessment." it says:

"Mr. Hakim is casting about for contacts
in the U.S. government with whom he can
find a mutuality of interests concerning
Iranian attempts to procure hardware in
(the United States."
That phrase, "mutuality of interests," what did
you mean^by that?

A Well, that's a phrasi that would mean that
somebody would provide intelligence or information and keep

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the U.S. government posted on what they were doing, in return
for which he would be told, you know, "We got a system up
here." "Hey, that system can't be sold, and you're wasting
your time trying to sell that system."

Q Okay. Explain that to me. Mr. Hakim, if I
understand what you're saying, is considering a proposal to
sell a certain system to Iran?

A Right.

Q Now, again, explain what it is that is in his
interest? Why is it in his interest to assist us?

Q It's in his interest to see if that is a system
that can be sold. In other words, his choices are to go
to the Munitions Control Board, as an example, and to file
a license, and he might spend a year or two trying to get
that license through and get approval, or at the end of
two years, after he's invested all this time and effort,
find out that he can't sell it or isn't going to sell it,
there's a U.S. policy against selling it. And it's not
unccnunon for people to try to strike a deal with the U.S.
government, where they say, "Look, I want to tell you what
I'm doing, but don't let me spin all my wheels here forever
pursuing a project that doesn't make any sense."

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Q And what role would CIA play in making Mr. Hakim
wiser than he would be otherwise?

A Well, I think about the only thing — first of all,
he'd have to check all that out to see whether there was a
policy for not selling something, and if there was a policy i
for not selling it, and it was not a secret, you might say
"to him, "Look, I don't think you're going to sell that. I
don't think you can sell that." '

Q And that would be someone in CIA would convey that ;
information to him?

A Yes.

Q Let me bring you down to the next paragraph, the
one numbered 3 on page 2 .

That starts out, "Mr. Hakim was transiting
Washington on August 4."

A Right. ;

Q How is it that you knew Mr. Hakim was transiting
Washington on August 4?

A I really don't know at this day and age, how I j
knew. When did I have the luncheon with him?

Q I believe it's contained in that paragraph?

A Okay. I met with him for lunch on 4 August. I

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knew he was transiting. The person who introduced me to him
was Wilson, so I'd have to assume from that, that I probably
learned of that from Wilson.

Q Up to this point, up to this luncheon on August ;
4, 1976, you had not yet met Mr. Hakim; is that correct?

A That's correct.

Q So at that luncheon that ' s described in paragraph I
3 at the Jockey Club, you actually came face to face with I
him; is that correct?

A Right.

Q At -that luncheon — I don't think I covered this
in your prior appearance. If I did, then please forgive me.
But at that luncheon, it was you and Mr. Hakim and no one
else; is that correct? Or was there someone else?

A I really don't remember that clearly. It's
possible that Wilson was there. I can't fix him definitely,
but I can't exclude him. I

Q What I'm trying to get to — I think you can see j
my problem. ■, How was the introduction made? ■

A Clearly, Wilson introduced me to him. Whether he
stayed for the luncheon or was there or not, I cannot
remember. I have trouble with that. I cannot say with

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certainty one way or the other.

My guess is, he probably was there, but it's
strictly a guess.

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Q Do you recall Aether you had developed a thought
in Mr. Hakim's case, to that degree of specificity?

A No. What I did was, I went out, met the fellow
and came back, wrote a rather fulsome report, put it in the
system and nothing happened. In other words, as I told
you the other day, I probably got some correspondence. My
recollection of what happened is, people came back and said
they simply weren't interested in what we had to offer, that
<^^ey had contacts that were better than what he was suggesting.

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Q Now at this time, did you yourself know either
Secord or von Marbod?

A Yes. This is '76. I testified earlier that I
met him in Laos. The Vietnam War was over. Yes. By then,
I knew von Marbod.

Q Let me back up. Do you recall how it was you would'

I
have know where these two individuals, Secord and von Marbod,'

were at that time?

A They were prominent in the situation in Iran. Their
names were in cable traffic all the time, so I certainly knew
that that's where they were.

Q As I recall your testimony — and correct me if
I'm wrong — after you parted company with General Secord
in Laos, you had very little contact with him subsequently;
is that correct?

A Yea. Basically, social contact, if we were both
acmmih^ze at the same time. I don't recall all of his
assignments, where he went, but there was a long period of
time that we weren't in any place where our paths crossed. !

Q Do you recall ever meeting him in Ed Wilson's i

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company?

A No, I don't. I don't recall meeting him in Ed
Wilson's company. I have no recollection of that.

Q And the same for Mr. von Marbod? Do you recall
ever meeting him in Ed Wilson's company?

A NO, I don't have any recollection of meeting him
with — nothing jumps out. I have known von Marbod for a
number of years.

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that when I came 'away from this, and I wrote this, I obviously
had the impression he had been on the periphery or knew how
these functions, and so forth.

Q And that in particular, he had some relationship
with French and British arms sales?

A Yes . On the periphery of whatever was going on at
that time. I have no way of recalling that.
Q You recall no particulars of that?
A No.

MR. MC KAY: Mr. Woodcock, do you know what the
blacked out line is in paragraph 6?

MR. WOODCOCK: No, I don't.

Let me have this marked as the next exhibit, number
10, and I will ask you to take time and read it.

(Shackley Deposition Exhibit 10
identified.)
MR. WOODCOCK: Let me identify it for the record.

{ This is a memorandu, dated August 16, '76. It's

I
three pages, single spaced, and appears to bear the signature

of Theodore G. Shackley, on the third page.

The subject is "Mr. Albert Hakim, Iranian National

and Importer/Exporter." ' 'v.^-'

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Take a minute, if you would, to read that.
(A pause.)
BY MR. WOODCOCK:

Q Now, again, as with Deposition Exhibit No. 8, on
Deposition Exhibit No. 10, is that your signature?

A Yes, that certainly looks like it.

Q And have you had a chance ot review that?

A Yes, I have.

Q Let me ask you just a few questions about that.
From the introductory sentence of that memorandum on page 1,
it appears that 14r . Hakim is making yet another trip to
Washington.

Is that the way you read that? That is separate
from the one where you met him in August 4?

A Yes, I'd say that's another trip. It certainly looks
like it.

Q Now, it's not clear from the memorandum, but do
you recall whether you met him on the second trip?

A I don't have any recollection of meeting him, and
this doesn't say. that I did meet him. I think if I had met
him, I probably would have said somewhere, unless we have
another memo that says that I did meet him or something, but

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normally, i think the information would have been, if I met
him, that I i^t him at such-and-such a place.

Q Now, you brought Mr. Hakim to the attention of
George Cave^^^^^^^^^^^^^^^^V Do you whether,
you brought this to his attention that anyone else was present!?

A No, I don't.

Q Do you recall bringing this to his attention? i

A No. This refreshes my memory. I have forgotten 1
all about this. I know George Cave, and I think I told you
the other day, I didn't remember. Nothing popped out at that ',
time when we were discussing George Cave, but I do know him.
It says I talked with him, so I did talk with him, but I don't
recall the meeting.

Q You don ' t have an independent recollection?

A No, I don't.

Q Do you recall, having read this. Cave having any

involvement — an independent recollection of Cave having j

any involvement with this at all?

1
A NO. And this is perhaps one of 20 or 30 such

meetings I might have had during the course of any particular

day dealing with various items. Z just don't recall discussir|g

this with Cave, other than that's what it says there, and I

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have to accept what it says there is correct.

Q Partly through the sentence, it notes, Tom Clines
was then DDO Training Officer, had also met Mr. Hakim in a
social context.

Do you recall how it is that you knew that at that
time?

A No, I don't. But obviously, I knew it somehow, or .
it cmme out, because it's in there.

Q Having seen that, is it possible that he is one of \
the contacts you're referring to in your earlier memoranda,
who was giving you information on Mr. Hakim?

A I have no specific recollection of it, but I can't

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294

exclude it, you know, that he was one of the people. My main
recollection is, I was introduced to this guy by Ed Wilson.
That's the main thing that sticks out in my mind, and it's been
a long time ago.

295

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295

Q Let me ask you this. You have had an opportunity
now to read to the end of this deposition, Exhibit No. 10.
As the Associate Deputy Director of Operations, was it usual
for you to get involved in this kind of detai]

A It could be, yes. I mean, a lot of
proposals were discussed with me, but as I recall, this one,
for some reason, never went anywhere. As I recall, this
thing all fell apart. You probably have an additional track
in here.

Q I will show that to you in a moment, but on that
question, you have looked at these two memoranda in detail,
and they show a personal interest on your part in this deal.
Is this unusual to you, or is this typical to you
thmt you would have gotten involved in this kind of detail?

MR. MC KAY: I'm going to object to the question,
in that it talks about a personal interest. He is involved
in his office capacity, if that's what you mean.

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BY MR, WOODCOCK:

Q Excuse me. Not a personal interest separate from
your official duties. I'm not implying that, but that you
personally are taking a lead in this. That's what I mean by ;
that.

A No, that would not be unusual. I meet somebody, I
put a memo into the system. I checked on it. It would also ;

be quite common for me to look at some ceible traffic coming

Q So that would be something that you, yourself, might
do as opposed to say, to somebody who is a subordinate, "Look,
we have ccnne across this interesting character. You go out
and meet him, and you make the judgment on him."

That's something you yourself would do as AODO?

A Yes . i

Q Do you know whether, in following that kind of
practice, it would be unusual for an ADDO, or is this pretty
much standard in your experience for an ADDO to get involved
in that?

A No, I don't think it's unusual. It depends on the

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times and the events and the areas of interest. There are
predecessors in that job that did a lot in the covert
action activity that were very much interested in various
aspects of covert action and played a very action role.

MR. WOODCOCK: Now, I have some cable traffic that :
resulted from your two memoranda, and I won't burden you with

I
f

The first ccUale, which is dated August 18, "76, '■

based on the inquiries that were generated

by the interest in Mr. Hakim, giving a position

on the proposal to use Mr. HaUcim> let me have it

marked as Exhibit No. 11.

(Shackley Deposition Exhibit 11

identified.)

MR, WOODCOCK: And I'll ask you to take a moment

to read it.

(A pause.)

THE WITNESS: Do you have the other one, because

i
this doesn't make sense? Do you have the 90015? Obviously, \

i
sc^nething went out.

MR. WOODCOCK: Well, there are two that went out

I wasn't going to burden you with them. Let me have them

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marked as exhibits, and you can read these, the predecessor
cables.

The first cable, number 900015, followed by 900016
Both are dated August 17, 1976. They were sent out within a
minute of one another. They are companion cables.

I'll have 900016 marked as Deposition Exhibit 12
and then 900016 marked as Deposition Exhibit No. 13.

(Shackley Deposition Exhibits 12 and 13
identified.)
BY MR. WOODCOCK:
Q Now, Mr. Shackley, have you had an opportunity to
read each one of these exhibits?
A Yes.

Q I was really interested in Deposition Exhibit No.
11, which provides the rationale which^^^^^^^^Bmade for
rejecting the proposal to use Mr. Hakim.

Is that rationale consistent with your recollection
of what happened here?

A I think I told you the other day, I just remembered
this was turned down by the field. I didn't recall the
rationale when we talked about it the other

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299

But this also shows there
was some concern about Stanford Technology's reputation in
this field. It had escaped me, so this provides clarifying
data.

Q Do you recall whether you received this cable?
Do you have an independentrecollection that this information
came to your attention in August of 1976?

A No. I don't have any independent recollection
from it. Analyzing what I can see on this thing, it does not
appear that I got a copy of it. But that's by deduction
rather than by memory. I may be able to unravel this. Just
give me a minute and let me look at this.
(A pause. )

No, I can't tell. I thought I could tell from
this, but I can't.

Q In your August 16 memorandum, I think it was, you
charged Mr. Cave and Mr. Clines with drafting the cable
traffifc to make the proper inquiry

Do you recall either one of them coming back to you
and saying this is what we've got; it isn't going to fly, or
they're not interested for the following reasons?

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A No. The only recollection I have of this thing is ■
that it fell apart. It didn't go anywhere. That's all I
remember of it.

Q Do you recall, independent of this cable, coming |

cross information that either Albert Hakim or Stanford

Technology had, I think what the cable calls "an unsavory

reputation"? ■

I
A No. I know that's what this says, but I don't

recall that coming up with it.

Q You don ' t recall getting that information from any
of the contacts that you had originally made in Mr. Hakim's
name available to you?

A No , I don ' t .

Q Subsequent to these events, this August '76 period,

do you recall at any time other than right now, coming across

information that either Albert Hakim or his Stanford

Technology Group had acted in an unethical manner with the i

Imperial Iranian Air Force?

I
A No. I think the only thing I've seen — or seen

any time since — I think I saw some newspaper articles

recently that he was involved in some sort of a sale of

eunmunition or something, but that was in some newspgiper article

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301

I have seen in the last perhaps year or so.
Q So, other than public sources —
A No, I've not aware of it.

MR. WOODCOCK: Okay. I don't have any further
questions on this. '

MR. HOLMES: Okay. Let me just follow on the last
question. I

EXAMINATION

i
BY MR. HOLMES: '<

Q The person that he was supposed to be involved in
the ammunition sale happened to ^^^^^^^^^^^^^^^^^B ^°^
had never heard, up until the time of these hearings that
he had, in fact, been bribing^^^^^^^Hthrough the early
■70s?

A No, I have never heard that. The first time I ever;

knew he was actually involved in selling ammunition, as far

as I can remember, was, when I saw that in the newspapers. j

Q He was actually selling ammunition and primarily

I
selling an opportunity to build an ammunition plant in Iran

for a U.S. company, and as part of that was enriching

in a Swiss bank account. You had never heard up

until these hearings that the very person he was planning to

BRISASSIFIED

302

infiltrate had, in fact, already been bribed by him?

A No. I can't even make those match up, because
what I remember reading is a very short story in one of the
newspapers, and I don't even remember if^^^^^^^^^Hname
was in that story, that said he was involved in a sale of
ammunition to the Iranians, and there had been, you know,
bribes involved in that sale. And I can't even remember when
that was .

Are you saying during the time of this hearing? I |
don't even remember that. It's been within the last six
months or year that I've seen that, but I can't define it
more closely. I don't recall ^^^^^^^^^^Kname being in the
story that I saw.

Q Have you had any contact with^^^^^^^Hat all
since 1976?

A Why are you saying "since 1976"? I never met

Q Well, you had some conflict with his name in '76,
because it's in your memo.

A Yes. But that doesn't mean contact. I think we're
talking past each other. I do not know^^^^^^^^l I don't
recall ever having seen him or met him, and if you use that.

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in the course of any day, hundreds of names came across my
desk in the traffic.

[at any time

Q Do you recall talking withj
since these memos in ' 76?

A No. As a matter of Tact, the only time I remember
anything else coming up about^^^^^^^^^Bwas some newspaper
guy called me one day and asked me if I knew where
was. I think he's alive, in the United States, based from |
this inquiry that I got. i

Q But you don't know where? !

A I have no idea.

Q Have you ever been present when Wilson and Secord
discussed rescuing^^^^^^^ffrom Iran after the fall of the
Shah?

A No, I don't recall any such conversation. You know,
it's not the kind of conversation that — in what year?

Q Sometime after the fall of the Shah in '79. j

A No. In '79? No.

Q After that?

A No.

Q Do you recall any discussion for bringing any
Iranian out of Iran after the fall of the Shah?

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304

A Remember, I retired in '79. The fall of the Shah
was, I think, after I retired. I just can't remember when
the Shah fell. I retired in August of '79, and I think the
Shah ~

MR. WOODCOCK: I think he had left the country by
then. I think he left sometime in early 1979.

THE WITNESS: Okay. But by then, if he left in
early '79, I was not in a job where that. would have been a
topic for discussion with me.
BY MR. HOLMES:

Q I'd still like an answer to the question.

A I'm answering it.

Q Whether you heard such a discussion?

A I had no reason to. I'm trying to place myself
chronologically in the sequence of where I was. In '79, I
wasn't in a job where I would have access to that kind of
information, where it would normally be discussed with me.
I wms in an entirely different kind of a job, and I have no
recollection of^^^^^^^Hbeing a subject of discussion.
I wasn't consulted. Nobody asked me about him. \

Q During the time of the investigation of Secord and |

Wilson and others in relation to their dealings in the Mideast,

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305

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do you recall any discussion about Secord's use of an airplane
purchased by Wilson here in the United States?

A Yes, I think that came up in some of the questioning
of me. I know there was an airplane, and I know from these
questions, and so forth, that Secord flew the airplane.

Q Would I be presuming too much, if I presumed that
clients may have discussed this topic with you since he was
alleged to have flown with Secord in the plane?

A No, I don't recall that coming up with conversations
with Clines. My recollection of that — and this was a
series of questions that were put to me by an investigator
at that time.

Q You don't have any recall of any discussion about
it with principals, then; is that what you are saying?

A I'm trying to give you an answer, and I think I'm
telling, you that I don't recall. My recollection is that I
was asked about this, and I'm aware there was an airplane,
but my memory of it is that this came from questioning
about others who were playing the role that you ' re playing .

Q So you did know about it before you were asked
about it? I

A No, I have no recollection of being aware of that. 1

^mmm

306

MR. HOLMES: That's all. We can meet after
lunch.

Off the record.

(Whereupon, at 1:05 p.m., the taking of the
deposition was recessed, to reconvene at 2:10 p.m., this
same day . )

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307

w^tma

AFTERNOON SESSION

(2:10 p.m.)
Whereupon,

THEODORE G. SHACKLEY
resumed the stand and, having been previously duly sworn,
was examined and testified further as follows:
EXAMINATION (Continued)
BY MR. HOLMES:
Q You understand you are still under oath?
A Yes.

Q This afternoon, we are going to s}cip around a lot,
and if we hit the same general point, obliquely, several
times, you will understand why, and hopefully, we will be
able to move along a little more rapidly.

You mentioned Mr . Robinette the last time you were
here.

Could you tell me the history of your association
with Mr . Robinette?

A My memory is, I knew him for years and years in
the Agency. I can't tell you when 1 first met him in the
Agency. He's an old-time career employee, and so was I.

Q Have you ever had any association with him outside

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308

UNC^IWIED

308

the agency?

A Social contact. Talked to him periodically.

Q No business contact?

A No. I think, at times, we talked about risk
analysis business, investigative activity and so on, but we
never did any real business.

Q Have you ever spoken with him about his activities
during 1986?

A I talked to him in the context of the Avirgnan-
Honey lawsuit. I remember talking to him sometime about the
Avirgnan-Honey case, yes.

Q What about it?

A You know, what did he know about it and trying to
figure out what he had been looking at, if he had been looking
at it. You know, he's a professional investigator, has worked
for a lot of companies at various times that had investigated
resources, and I wondered whether he knew anything about this
particular group.

Q Did he ever work with Ed Wilson, do you know?

A Not that I know of . ■

Q What did he tell you about what he knew about ■
the lawsuit? I

309

A Basically, what he told me was, this suit had been
filed, what I already knew, that the majority of the people
were not linked together by any common thread. We talked
about tracking down some depositions. There are some
depositions by various people who are involved in that suit,
that were taken in Costa Rica, and so forth, or in the United
States. He was going to track them down, and so was I.

Q Was anything else said between the two of you about
his activities in Central America in '86?

A Not that I can recall. Everything was focused
really on, basically, this lawsuit.

Q Did you have any idea that he was doing any work
on the home of Oliver North?

A No, I didn't. I don t think that ever ceuae up in
any conversation with him.

Q Did you know Mr . Casey?

A I met him on one or two occasions .

Q How did that occur?

A I was at a dinner party where he was a speaker. I
remember meeting him under those circumstzmces .

Q Was that the only meeting you had with him?

A There may have been two similar type things, where

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310

he was the guest speaker at a small group that I was at.

Q Did you ever dicuss policy with him?

A No, I had no reason to discuss policy with him.

Q Did you ever discuss with any person a potential
idea for a business, the name of which was to be International
Security Systems Limited?

A International Security Systems? No. Could you
tell me any more about what you're trying —

Q My understanding of the business idea was that it
was to be a longtime European headquartered trading business
aimed at Iranian trade.

A No, I don't recall any conversation like that.

Q Dq you recall any conversation about that idea,
whatever label might have been placed on it?

A I recall some conversations with people who had
retired from various governmental agencies around the world
to create some sort of an international risk analysis
company, and s don't know that there was a time ascribed to
th«t.

Q With whom have you discussed the idea of an
international risk analysis company?

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311

UNCyiSSIFIED

311

A It's one of those files in one of those boxes that
I gave you. A fellow by the name of Peleg Radai. I don't
even know what the thing was. The name of this one company
was International Protective Security and Intelligence.
Is that what you were saying?
Q No, that's not the name.

A International Protective Security was the name of
his company.

Q The document you just referred to is a portion
of Exhibit 6 marked as H00231, his business card.

I gather Mr. Radia, referring to SH 229, was at
least for reference referred to Oliver North of the NSC by
yourself; is that what this document indicates?

A No. What I recall of that is, he told me he already
was in touch with Oliver North, and I said, "Based on
what you're looking for, that's your best bet for obtaining
it."

Q Do you whether he did, in fact, contact Oliver
North?

A I have no way of knowing.

Q What was it that he was looking for from Oliver
North?

wmmii

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312

A I think that he was looking for information on
something to do with a lawsuit in a magazine in Greece.

Q The issue is whether a magazine named "Ethanos"
was KGB-aonnected?

A Right .

Q And referring to SH230, the next page, Mr. Radai
told you that Mr. Livingston and also Mr. North were trying
to help him determine whether or not that was a true
allegation?

A Let me check what I wrote there. '
(A pause. )
Yes; right. That's what I wrote.

Q Did you ever discuss the concept of a worldwide
risk analysis organization with anybody other than Mr. Radai?

A There's another folder in there. 1 discussed it
one time with a Mr. Navoth — N-a-v-o-t-h, I believe.

Q Where's he from?

A He's from Israel.

Q And Radai is also from Israel?

A Yes .

Q What is the time period of these discussions?

A I don't know, really. You know, we're jumping

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313

around a lot here, and you're asking me some questions in
1976, and then we're up into the '80s here, and I can't be
more specific. It's in the file.

Q Does this Radai file help you at all?

A Yes. I need the other one. Okay. The first
contact with Mr. Radai with my office was in February of
'86. I did not talk to him in February of '86, but —

Q And so the conversations you're talking about with
Radai, in any event, were in '86?

A Right .

Q What is that the international risk analysis firm
would engage in, exactly?

A Just risk analysis, what is the threat and the

business environment, and so forth.

Radai was peurticularly interested in doing work

for airlines, helping them with training progreuns to deal

with international terrorism. Looking back on this Livingston,

that was not discussed with me, as I look at this memo.

Livingston was discussed with an associate of mine '

in my office. That was the first contact. i

i
Q This is Neil Livingston; is it?

A I don't know who it is. It just says Mr. Livingston

UNCUSSIBED

314

UNcmssinEo

was a political analysis firm.

Q Do you know Neil Livingston?

A No, I don't.

Q Do you know Doug Schlachter?

A Yes.

Q How do you know him?

A He was an employee of Ed Wilson on Wilson's farm.

Q And you met him out there on the farm?

A Right.

Q How often did you go to Wilson's faror?

A I'd say I'd occasionally go down there for a
Sunday picnic. I'd drive down with my family, and I'd bring
some wine and he provided the hamburgers. We'd have a
cookout.

Q Did your daughter have a horse that was there?

A Yes.

Q More than one?

A Ho, just one. I bought a pony from the Wilson
family.

Q And this is the same pony.

A This is the same horse. Eventually, it grew up
to be a horse. I bought it as a foal.

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315

UNCUtSSIFIED

315

Q Not a pony?

A No. I bought it as a small horse. Not a pony.
The term may not be correct. I bought it when it was a
small —

Q Ponies don't grow up to be horses.

A All right. This was, I guess, some sort of a
offbreed quarter horse or something.

Q How much did you pay for it?

A I don't know. Probably some munificient sum like
$150 or $200. I'm not sure what the exact amount was.

Q Moving through time with Schlachter, what dealings
did you have with him?

A I basically didn't have any dealings with him. He
was around on some occasions. He and his wife would join
in on these Sunday picnics. They lived on the property.

Q Did you ever have any business dealings with him
at all?

A No. I was not involved with him in any business
taHnaactions .

Q Never received money from him or gave money to
him under any circumstances?

A Never gave him money, never received any money

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316

from them.

Q Do you know Bobby Barnes?

A No.

Q Never met him?

A No, I never met him.

Q When you were at the agency, did you have any
direct connection with Nicaragua?

A Well, no. I mean, I don't know. You have to
phrase that question somehow differently because that doesn't
generically mean anything to me. In other words, what are
you trying to ask? Because did I have any contact with
Nicaragua, what does that mean? I mean, I read traffic
about Nicaragua.

Q Let's start with, were you ever there?

A No, I don't ever recall being in Nicaragua.

Q Did you have any meetings with Somoza?

A No. Never met Somoza.

Q Did you discuss with Mr. Clines or Mr. Wilson any
mgilting that he had with Somoza?

A No, I did not. I have no recollection of that. |

But that's again like one of these other questions that you j

I
asked me during the course of this investigation. Other |

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317

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317

investigators have asked me, you know, so I know or at least
I assume there has to have been some contact between them.

Q But like any other instances, you didn't know about
any contact that they had with Somoza or trips to Nicaragua?

A No, I was not aware of it.

Q Or any of what turned out to be allegations before
you were asked about it in an investigative context?

A Right. I was not aware of it.

Q Did any business that you have been associated
with receive money through a corporation in Texas?

A Any corporation in Texas?

MR. MC KAY: Can you give us the name of it?
THE WITNESS: If I'm not mistaken, API Distributors
was originally a Texas corporation licensed — I think it
was licensed to do business in Virginia.
BY MR. HOLMES:

Q And did it remain incorporated in Texas?

A I don't remember . This is what I recall. That
may have been a Texas corporation, licensed to do business
in — I can't remember if it was Texas or Delaware. That's '
the only one that I can think of.

Q Was there a Delaware corporation that was

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318

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318

associated with you in some way?

A Let's see. RAI is a Delaware corporation.

Q RAI is a Delaware corporation?

A Yes. TGS is a Delaware corporation, as I recall,
doing business in Virginia.

Q Did Hakim have anything to do with EATSCO that
you're aware of?

A Was he ever present at their offices, that you're
aware of?

A No. I can't say that I ever say him there. My
own trips out there were very rare, and therefore, not
necessarily a good indicator. I never recall seeing him
there.

Q I notice in your financial records a line of
credit.

A Yes.

Q Do you know what a back-to-back loan is?

A Yes, generally.

Q Has any corporation or any of the businesses

we listed out this morning ever had a back-to-back loan that

you're aware of? I

MR. MC KAY: I don't understand what that has to ■

^mmm>

319

do with his line of credit. Are you tying the two together?

MR. HOLMES: I'm just telling him why I'm asking
him the question.

MR. MC KAY: So that was some preface to
back-tb-back loans?

THE WITNESS: No, I can't recall any. The line
of credit I have is from a bank for TGS International, and
that's simply a line of credit obtained from the bank that's
periodically renewed.

BY MR. HOLMES:
Q Turning then to that specific line of credit,
that line of credit is in no way conditioned on or related
to any deposit that may have been placed in another financial
institution anywhere in the world?
A No.

Q I hesitate to ask you some of these questions,
because I probably asked you before when you were not under
oath. I have to ask again.

You are aware of a bank called Nugan-Hand Bank?
A Yes, aware of it. I'm aware of the existence of
the bank called Nugen-Hand. !

Q Ever been in Australia?

IINClSSS!fi[i!

320

A Yes, I have been in Australia.

Q When?

A When I was an employee of the U.S. government.

Q What time frame?

A I have no idea. Probably somewhere in the period
1973 to 1976. Somewhere in there. That's the best I can.

MR. MC KAY: I'm going to object to the whole
line of questioning about the Nugan-Hand Bank. I can't
conceive of the Nugan-Hand Bank bearing upon the committee's
mandate. Whatever went on, Mr. Sheehan apparently is in
the Nugan-Hand Bank. For whatever reason, I don't know.
He's made a great flap about it. I can't imagine why this
committee's interested in Nugan-Hand Bank.

MR. HOLMES: Well, it's connection is that Mr. Clines
and Mr. Secord are connected with these allegations, and
they are principals in our investigation, and therefore,
their associations previous are of interest to us. But I'm
sure Mr. Shackley can, in some way, put this to rest.

MR. MC KAY: Well, let's move through it rather i
than talking. I just don't see what in the world it has
to do with what we're spending time with.

^m.mm

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321

BY MR. HOLMES:

Q Have you ever been to any branch of the Nugan-Hand
Bank?

A No, I haven't been to any branch. I haven't
been to the bank.

Q Ever have a deposit there?

A No, I have not.

Q Ever had any control, whatsoever, over any funds
that were on deposit withthe Nugan-Hand Bank?

A No, I have not.

Q Do you know anybody who has?

A I think I told you once before, the only fellow
that I, know that was connected with the Nugan-Hand Bank was
an employee of theirs. Hand himself, and a fellow by the
name of Houghton, who worked for them.

Q How did . know these individuals?

A I k'lew Hand from Laos. He was in Laos when I
waA in Laos.

Q And Mr . Houghton?

A Houghton I met here in Washington after I retired.;

Q And you say he was an employee of the bank?

A That was my understanding that he worked for the I

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UNCkASSlFO

322

bank, primarily specializing in the Middle East. I think it
was Saudi Arabia.

Q And your connection with Houghton was after his
connection with the bank was over?

A After his connection with the bank was over?

Q Was he still working for the bank when you met
him? I may have misinterpreted the way you phrased that.

A All I remember is the one time he had something
to do with the bank, and he was responsible, sort of, for
Saudi Arabia.

Q Have you ever had any business dealings with either
Hand or Houghton of any kind?

A Yes. I met Hand after I retired, on the basis of
a telephone call from Bill Colby, who said Hand was in the
Washington area, had asked about me, would I have any
objections, in terms of meeting Hand. I met Hand here in
Washington .

Q And I gather from your answer that was at least
in contemplation of some kind of business relationship?

A No. We had a couple of meetings. I don't
remember whether it was two or three, over the period that
I had contact with him after I had retired. He put me in

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323

touch with a friend of his in Taipei, who did some research
for me on trying to get valves and flanges manufactured in
Taiwan. Nothing ever came of that, because of the way the
Taiwanese people wanted to structure the deal. It was just
not a doable deal.

Q So the reason -- the reason you answered yes to
the question of business dealings with him was that there
was a business type of meeting?

A Yes .

Q No actual money transferred?

A No actual money transferred. There was a
discussion of whether he could help me or whether I could
help him. The only thing that was ever followed up, had
my office correspond with the guy in Taiwan about valves
and flanges and nothing ceune of that.

Q Other than those meetings, you never had any
business meetings with either Hand or Houghton?

A With Houghton, I think at the time I knew him, I
may have seen him here in the Washington area two or three
times also. On one or two occasions, I had a long distance
phone call from him, where he was chasing, I think it was
aviation gas, J. P. 4. And I never did put any kind of

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deal together.

Q Which brings us rapidly back to Ghorbanifar in
November of '84' right? You met with Ghorbanifar in
November, approximately the 20th, and you had been in Europe
a total of about three days during that trip; is that right?

A The best I can remember it is, that it was the
19th through the 21st. That's my memor of the thing, the
19th through 21 November of 1984.

Q I want to know the names of every single person
that you met or talked to during those three days.

A Well, let's see. I left here with|

Q All right. ^^^^^^V-^

A I talked with^^^^^^^l Got to Hamburg and met
The next morning, as I recall, I met
Ghorbanifar and talked with^^^^^f I'm trying to walk
through this chronologically. Oh, I had dinner with a
German friend of mine that evening.

Q Who ia that?

A His name i

Q His first neuae?

Q And did that have anything to do with business?

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A No. Let's see. I had dinner with him and his wife,
Q Anybody else?

A I'm trying to think. Well, that evening, when I
to^^H^^no, askec^^^^Hto check for

me on the possibility of who from the Iranians might be in
Hamburg.

Q How would he be able to check that?
A

Q A government type?
A Yes. ^^^^H government .
Q Did he ever tell you who?

A No. He wasn't able to run down anybody that was
any kind of concern.

Q You were trying to ask him if the Iranian
government was shadowing you?

A No. I din't know when we arrived who we were going
to me, so I asked him to try to find out for me who was
going to be in the area, could he check, was there any
recaption planned, and so forth, with a delegation, to find
out that kind of data for me. I was trying to figure out
who these people were going to be.

Q This was before you met Ghorbanifar? ■

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A Yes. Or maybe it was — yes, I met him the next
morning. I think I talked witl^^^^^^Kn the phone when
we first got there on the 19th.

Q And then he reported back to you later on that he
was unable to determine anything?

A Yes. Basically, there wasn't anybody of any
particular interest there.

Q And when did he report that back to you?

A Probably either the late evening of the 19th or
the morning of the 20th.

Q So he got right on the phone then?

A Yes. I talked with him on the phone, as I recall.

Q And he must have gotten right on the phone.

A I don't know how he did it.

Q Was there anybody else that you met during these
three days?

A No. I flew from there, as I recall, to London
and then from London back to the states. As I flew Hamburg
to IdOndon and thea London to the states.

Q And you didn't meet anybody in London?

A I don't have any recollection of that. I'd have
to look at my travel, and so forth, but I don't have any

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recollection at this point in time. I think I came straight
back. That's what I recall.

Q All right. Do you know a Misha Popov?

A No , I do not .

Q Do you know a Harry Rastatter?

A Yes. I think I have talked to a fellow — wait
a minute. Harry Rastatter, the name is familiar. It has
come up in some context. If you refresh my memory a bit
as to who he is.

Q He was an associate of Hakim's through the late
'70s, early '80s in California and elsewhere.

A The name is familiar to me. I can't place it in
any context at this point in time. I can't sharpen it up
any more. There are two or three people in that company
that we dealt with. You asked me the other day about one
of them, who was the guy that worked on some radar thing,
and I remember him vaguely. His name is familiar, and I
know it csune up in other questioning of me, but I can't
place it at this point in time.

Q I don't recall whether you have told me that I
you did or didn't see any part of the hearings.

Did you see any part of the hearings on this?

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A I watched some-. of it, but sort of an in and out
kind of thing. You know, stop and look at it. it was on
in my office.

Q If I refer to ARIA, a ship that was purchased
through Denmark by North, Secord, Hakim, et al., would you
know what I'm talking about?

A Yes, I know there was discussion of the purchase
of a ship.

Q Had you ever, through any other source, heard -
about the ship prior to the public disclosure?

A I have no recollection of anything about a ship.

Q And there was also reference in the hearings to
some radios that were supplied tol

A I have no recollection of that ever coming up
in any conversation I have been involved in.

Q You never discussed supplying any radios to any
[nation with anybody prior to the hearings?

A No, I have no — I recall no radio.

Q Would it be fair to say that after the Turner
years, that the CIA was engaged in a period of rebuilding
and revitalizing its covert operation capabilities?

A After the Turner years?

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Q Yes.

A I have no way of knowing.

Q You don't mean to say that you just haven't talked

to anybody in the CIA since you retired?

A No. But that's not the kind of thing you would

talk to him about. For instance, I have been at meetings

who
where people/were still in the CIA were present. I may have

said hello to them, John or Bill or whatever it is, and

may have discussed the topics that were being kicked around

at the symposium or whatever, but I certainly would not have

talked to them about covert action capability and what they

were doing.

Q Have you discussed with anybody the general

proposition of a need for a covert or paramilitary action?

MR. MC KAY: In what context? Is this since '79?

MR, HOLMES: Since '79.

MR. MC KAY: In terms of CIA activity?

MR. HOLMES: No. As a general proposition, in or
out of the CIA.

THE WITNESS: You're going to have to be more
precise. You know that I've written a book on guerrilla
warfare. You know, I've lectured at universities, and so

330

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forth, but I don't — I taught a course at Georgetown, so
yes, I have talked about the reorganization of the
intelligence community, but that's something I have also
written about in my book.

I have written articles on various and sundry
things, but I don't discuss those with the people in CIA?
I lectured at the Air War College.
BY MR. HOLMES:

Q So am I understanding correctly that you, since
'79, have taken a strictly intellectual role in that process?

A That's right.

Q In other words, as an academic advocate perhaps,
but in no way connected with any operations?

A I have not been connected with any CIA operations
since I retired.

Q Have you been connected with any operation that
could be classified as a covert* or paramilitary, even outside
of the CIA?

A No, I have not.

i
Q Do you know a Norm Callahan?

A No. That name doesn't ring any bells with me. 1

I
1

Q Have you ever met a Heine Aderholt — j

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331

A-d-e-r-h-o-l-t? Is that the correct spelling?

A This Callahan? What is his first name, Norman?

Q Norm, yes.

A No, I don't recognize Norman Callahan.

Q Are you feimiliar with Mr. Aderholt?

A I met Aderholt at some point in Southeast Asia
between 1966 and 1972.

Q Have you had any association with him. since then?

A I think I may have seen him once since I retired,
in some social event here in Washington. That's the only
thing I can recall .

Q No business association?

A No.

Q Have you ever discussed with him covert operations
or the general need for them?

A No. I don't recall. I don't recall discussing

it with him, but he and I were at a symposium, I think, and

i
if you call that a discussion with the people talking from

the floor, I don't know. !

i
Q I wouldn't classify it as that. |

332

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332

A But he and I were at the National War College
at some symposium.

Q Do you know of a person named Svendsen -
S-v-e-n-d-s-e-n?
A No.

A former Air Force officer?
NO. I don't have any memory of a Svendsen.
Do you know of a company named All Source?
NO. that doesn't tell me anything, i-m not
familiar with that company. All Source.

MR. MC KAY: I don't think that's even on the
sheet.

Off the record.

(Discussion off the record.)

BY MR. HOLMES:

Q Do you have any connection whatsoever with any
funds were derived or destined for^^^^H^^H
since your retirement from the CIA?

333

maSSIflEO

333

A No.

Q Do you know an individual named Max Hugel?

A No, I don't personally know him.

Q Do you know of him?

A I know of him from reading about him in the papers .

Q And that's your only connection?

A That's my only connection.

Q You said, the last time we were together, that
you knew Richard Allen?

A Yes.

Q Have you ever discussed —

A I think I said that, but I do know Richard Allen.

Q Have you ever discussed with him the need or a
need for a covert operations capability?

A No. And certainly not in any one-on-one
conversations. He may have been in some symposium, again,
that I have been at.

Q Have you ever been to Panama?

A When I was in government, yes, 1 think I transited
Panama a couple of times.

Do you know the name Steven Samos, as a person

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in Panama?

A No. That's not a name that registers with me.
Q It's S-a-m-o-s.
A No.

Q Are you familiar with the name Ramon Milian
Rodriguez?

A No, I'm not, but I think I read something about
him in the papers recently.

Q Prior to your reading about him in the papers, you
had not heard about him?

A No, that's not a name that I'm familiar with.

Q Just so we're on the same wavelength, what was it
that caught your attention about this individual in the
newspaper?

A I think I read somewhere that he is in jail, that

h«'a a drug smuggler or something. That's what I remember

reading about him.

Q I think we must be talking about the same

I
individual. This one was a money launderer, to be precise.

for drug smugglers.

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NSm^tED

335

A It's probably the same individual. That's the
extent of my memory from what I read is different from
what you're telli:

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336

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336

Q Since your retirement from the CIA, have you .
become aware of any government entity using a commercial
laundering service?

A No. I'm not aware of any.

Q How about any other entity? Have you any knowledge
of any such service even existing? Let's start with that
proposition.

A You mean money being transferred or converted
sanehow?

Q Right.

A No, I'm not, other than straight commercial
bank transactions. No, I'm not.

Q Now, this Milian Rodriguez claims to have made
payments to the Watergate burglars with government funds.

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Can you confirm or deny that that occurred?
A I have no way of knowing.
Q You just don't know?

A I just don't know. I have no way of knowing.
Q Now, you know an individual named Benson; is
that correct?

A What's the name?

Q Benson.

A Which Benson?

Q I don't know which Benson.

Q And did he furnish you with any information after
you left the CIA?

A No. He came up, I think, one time when I talked
with him, when I was checking something about an overt

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338

teference to the Soviet constitution, when I was writing my
book, and I think I talked to him about my book, and I think
in some library or one of the libraries who looked up
something for me on the Soviet constitution. An exact
quoting out of the Soviet constitution.

Q That's the only information you received from
him since you retired?

A Right. Well, he works with me now
If we're talking about the same person.

Q He works with you now?

A Yes. A fellow by the name of Benson Grayson.
He's an economist researcher, and he's working for me, if
that's who we're talking about.

Q Your papers identify Barbara Rozzotti as a primary
counsel to your firms.

A Yes.

Q This is the saune woman who was also Hakim's
lawyer?

A I don't have any knowledge of her being Hakim's
lawyer.

Q Is she also Clines' lawyer?

A Let's eee. Yes. At one time, she did represent

m^m

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339

Clines.

Q And that was in connection with the recovery of
the loan from Wilson?

A I don't know the totality of what she did for
him, but I know she represented hin.

Q Did you discuss her with Clines?

A Discuss what?

Q Did you discuss the underlying acts on which
Barbara Rozzoti was representing Clines, with Clines?

A No, not once he got off and was off into — she was
the lawyer for — she worked on helping me get API properly
registered and, you know, that kind of thing, and in later
years, I know that she represented Clines. What was the
nature of the representation, I don't know.

Q Did you ever come into possession of furniture
that had once been used by Mr. Wilson?

A Not that I know of. but I think in the API offices,
th*re was some furniture there that Mr. Clines had, and I
have heard stories that some of that, at one time, belonged
to Wilson. I

Q From whom did you hear the story? i

A I don't where I heard those stories, but that's I

UNOli\$!^F![D

340

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340

what I heard.

Q Did you ever ask Mr. Clines, "where did you get
the furniture"?

A NO.

Q Did those stories include the story that the
furniture had once belonged to Task Force 157?

A No, I had not heard that.

Q So the story you heara was that it was Wilson's
personal furniture?

A Right. It had, at some point in time, been in
some facility that Wilson had had, and Clines had the
furniture. That's all I can tell you.

Q Have you or has any business you're associated
with ever received funds from Mr. Clines at the EATSCO
office?

A Any funds ever received from EATSCO were, as far
as I know, collected for the papers that we did for them.
I don't know how I got those. I assume those came in the
mail, but they were very slow paying. Maybe I did go out
to their office. I don't really know. I think I got paid
by check and all of those came in the mail.

Q None of that money was in cash?

UNmsiriED

341

^mmm

341

A No.

Q And it was not in excess of the total of $8000?

A That's my recollection that the total was $8000.

Q Did you ever know Frank Terpil?

A No.

Q Did you ever discuss with Mr. Clines his
relationship with Ghaddafi?

A His relationship with Ghaddafi? Clines'
relationship with Ghaddafi?

Q Yes.

A No.

Q Did you ever discuss Wilson's relationship with
Ghaddafi with emybody, including Clines, prior to the
investigation?

A No. This has all been covered ad nauseeun in all
these investigations, and so forth, so I know that Wilson
was doing work for Ghaddafi.

MR. MC KAY: He's asking you, prior to the time
of these investigations.

THE WITNESS: No.

MR. HOLMES: I'm aware this is something you know
ever since the investigation.

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uiffitiesM

342

BY MR. HOLMES:

Q Does Clines have a daughter?

A He's got a couple of daughters.

Q Either one of them ever work for Hakim?

A Not that I know of .

Q Do you know a Jerry Daniels?

A I know a Jerry Daniels.

Q How do you know him?

A He was in Laos.

Q When you were there?

A Yes.

Q What has your relationship been with him since
then?

A He ' s dead .

Q When did he die?

A I don't remember when he died. He died after I
retired, but that's as close as I can fix it for you.

Q Between Laos and the time that he died, did you
have any contacts with him?

A I don't ever recall seeing him after I left
the government.

(Recess. )

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343

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343

BY MR. HOLMES:

Q We were talking about Jerry Daniels, and I just
asked you if, between Laos and the tine of his death, you
had any contact with him,

A I don't recall between my retirement and his death.

Q Is there a Four Seasons restaurant in the
Washington, D.C. area?

A Yes .

Q Have you ever been there?

A Yes.

Q Ever been there with Secord?

A I have no memory of going there with Secord .

Q Have you ever been there with Hakim?

A Yes, I think I have.

Q And how and when did that occur?

A A niimber of years ago. I can't remember when
Hakim stayed there, and I think I met him, and either had
breakfast or lunch with him at the hotel.

Q Approximately when was this?

A I have no idea.

Q Was this after your ' 76 meetings with him?

A No. This was after I retired, but I don't know

UNIUSetHED

344

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344

when that was.

Q Could Secord have been there with you and Hakim
on that occasion?

A I have no memory of Secord being there.

Q Have you ever heard of an air freight company
named Trans World?

A No, I haven't. I think it's one of those listed
in your subpoena document.
That's my only —

Q Do ydu know an Ed Dearborn?

A Ed Dearborn?

There used to be — I don't know whether this is
the same fellow.

Q The same individual.

A All right. So I know hin

I don't ever recall seeing him since I

retired .

Q Do you know a Gene Vlheaton or Carl Jenkins?

I
A Carl Jenkins, I know. And what is the other

guy's name?

Q Gene Wheaton — W-h-e-a-t-o-n.

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345

ranember his first name. I'm not sure it's the same guy,

Q Let's assume it's not.

A Okay. That's the only Wheaton that I can remember.

Q And Carl Jenkins?

A Carl Jenkins,

Q Have you had any contact with him since then?

A I haven't seen him in a number of years. He-
occupied some office space in Clines' companies at the time
that I moved out of there. He was beginning to occupy some
space .

Q And the nature of his business at that point in
time?

Q
then?

I have no idea.

You have never done any business with him since

No.

No business-related discussions?

I didn't do any business with him then. You
say I haven't done any business with him since. I mean, I
haven't done any business with himj_.^Hl8t know he was

business with tiim. ^ius

346

scheduled to move in, as I moved out.

Q I understand. All right.

Have you heard of the Southern Air Transport
since your retirement, other than these investigations?

A No, not other than these investigations.

Q The name Southern Air Transport was new to you
when it hit the newspapers as connected with the Hasenfus
airplane?

A You're going to have to clarify that. Southern
Air Transport, you know, you asked me some question about
it, and I told you you ought to go talk to the Agency about
Southern Air Transport.

Q All right. I'm going to carve out a piece of
time.

A So you're going to have to be more specific.
Otherwise, I can't help yovi.

Q You retired in '79?

A Right .

Q From the date of your retirement — that's the
beginning date — Hasenfus was shot down October 5, '86.
That will be the ending date. Did you hear about Southern
Air Transport between the beginning and ending date?

347

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347

A No. I don't recall Southern Air Transport ever
coming up.

Q Do you know an individual neuned Bob Lilac?

A Yes. I know Bob Lilac.

Q How do you know him?

A He was an Air Force officer working in the
Pentagon, and as I recall, I met him here in Washington
after ■! retired.

Q And in what context?

A I think I met him when I was helping Bander Bin
Sultan, when he was working on his master's program.

Q And you were helping Prince Bander in what
program?

A He was getting a master's degree from Johns
Hopkins _Jfrie«^niversity here in Washington.

Q What help were you to him in that program?

A I was peurt of the lecturing staff for his master's
program.

Q Would you explain to me what that is?

A Well, a program was laid out for him by a group
of people, so he could qualify for a master's program.
I was one of the instructor — lecturers in that particcular

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348

program.

Q And they called it a lecturer, even though it's
more like a tutor?

A Yes. That's my recollection of what they called
it, was a lecturer.

Q The function that you performed was one-on-one
tutoring with the Prince?

A Yes, basically, one-on-one. Sometimes there would
be one or two other people there.

Q And this was what period of time?

A I retired in '79. I don't know. It could have
been '79- '80, somewhere in that period.

Q And the subject of your lecturing?

A Was such things as national policy formulation?

Q And that was arranged through Mr . Lilac?

A No. That's how I met him. Lilac was in and

out of Bander's quarters at that time, and if I'm not

mistaken. Lilac was the Saudi Desk Officer at the Pentagon

at the time .

Q Was he also a personal friend of the Prince?

A I couldn't characterize that. He was in and out

i
there all the time. That's all I can tell you. What their ;

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349

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349

relationship, I don't know.

Q We touched on a project with Mr. Neidhart —
N-e-i-d-h-a-r-t — at Hakim's company, Stanford Technology.

A Yes.

Q The nature of the particular project was helicopter
transportable radar; is that correct?

A No . You were trying to —

Q I asked you once before.

A You tried to get me into this helicopter radar
business, and I was telling you that, no, ray recollection
was radar for Trinidad and Tobago, and it was coastal
surveillance type of radar.

Q Would it be suitable for installation in a van,
for example?

In other words, was it mobile?

A I don't remember. All I know is it was coastal
surveillance radar.

Q Oo you know whether any such system or similar
system had ever been developed by the CIA or any contractor
for CIA?

MR. MC KAY: What system? j

MR. HOLMES: The system he was discussing with i

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350

Mr. —

THE WITNESS: No, I'm not aware of any.
BY MR. HOLMES:
Q You're not aware whether there was or wasn't?
A Yes. I mean, that's normally not the kind of
thing that would have been developed by CIA.

Q Have you had any dealings with Jamaica since you
retired?

A No. Dealings? No. I had some inquiries that I
made of these things, but I haven't had any dealings with
Jeimaica.

Q What were the inquiries about?
A I was trying to find whether the Nigerian oil
minister was visiting Jamaica, and he was supposed to be
in Jamaica.

Q You never had any business dealings?
A No , nothing .

MR. MC KAY: Off the record.
(Discussion off the record.)
BY MR. HOLMES:
Q Since you retired, have you met former National
Security Adviser Robert McFarlane?

mm^mt

351

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351

A No.

Q Have you met Elliott Abrams?
A No.

Q Do you know whether they are members of an
organization known as The Circle? Just yes or no.

A I don't know that they are members of that
organization.

Q Have you ever heard of an individual named
Richard Brenneke — B-r-e-n-n-e-k-e?

A No, that's not a name I'm familiar with.
Q He's an Oregon businessman.
A No, that doesn't ring any bells.
Q I'd like you to tell me what your history of
association has been with Oliver North.
A Very simple.

Q It may be a very short story.

A It is very short. I ran into him once, as I told
you, in the office of a Washington attorney.

Q Now, that's for personal meetings; right?
A Right. I

Q That ' 8 your history with North on personal meetings^
A Yes.

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352

NMSSIflED

352

Q Have you ever referred anybody to Oliver North for
any operational purposes?

A No, not that I can recall. You know that one file
that we're looking at, somebody said they were already in
touch with North, and I said that's probably a good guy to be
in touch with.

Q And you have never spoken with him on a personal
meeting, other than that one time?
A That's right.

Q And I ask you the same questions ror Mr . Poindexter
A I did meet Poindexter once sometime in the fall
of 1985.

Q What were the circumstances of that meeting?
THE WITNESS : Can we step out for a minute?
MR. HOLMES: Sure.
(Recess. )

MR. HOLMES: Back on the record.
THE WITNESS: Would you mind repeating the
question?

BY MR. HOLMES:
Q I asked you the circumstances of your meeting with

\MmM

353

Vice Admiral Poindexter.

A I took an Italian citizen over to the White House
to meet him. After the introductions were made, I left.

Q This was in the fall of '85?

A Yes.

Q You have never spoken to him before or after?

A No, I have not spoken to him before or after that.

Q And how was it that you took this particular
citizen to see him?

A This fellow was looking to talk with either
Poindexter or McFarlane, and I arranged for him to meet
Poindexter.

Q For what purpose?

A To discuss a Vaticem issue.

Q I gather , from the f ac t that you referred to your
lawyer, that this has some national sensitivity?

A Yes. It's a sensitive thing, and it is Vatican
business and doesn't have anything to do with this.

MR. HOLMES: I'm going to go through these files
that you provided us and simply stop at points where
questions come up. '■

As we go through, I'll identify the page number

cf-nsoM. imcrnj. inc

UREBlSSIflED

354

UNCLASSIFIED

354

that we're referring to, and in each case, the number will
begin with an "S-H." I'll just say the numerical designation
that follows.

BY MR. HOLMES:

Q I'm looking at page 163, the Michael Ledeen file.
I gather from this and other documents in this file,. that
you have been discussing deals relating to oil with
Mr. Ledeen for a number of years; is that accurate?

A Yes. Either I or somebody in my office, primarily
Mr. Jameson, one or the other of us.

Q And would it be fair that you and Ledeen were
partners in various ventures, hoping to obtain oil fields?

A No. That;s not —

Q Why is Mr . Ledeen receiving copies of these
various proposals then?

A Can I see that one? I think, as I told you the
other day — okay, this looks like, if a deal had come out
of this, there would have been a fee for the participants.
But it's not a structured kind of thing, where you would
call it a partnership. In other words, somebody helped you
put together a particular oil transaction, you end up with i
the equivalent of a finder's fee. Had one of those gone i

CI-fnOAl. (KKNTTUS. IK

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355

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355

through, that's what would have occurred, but the reason
I wanted to look at this is because Mr. Jameson and Mr. Ledeen
did do some business separate from me. I wasn't interested
in pursuing it. I think I told you that I didn't think it
had any chance of success, and I wasn't interested in
pursuing it. They decided to pursue it. They did and nothing
ever came of it.

Q Although the word "partnership" sounds a little
strong to you, maybe "joint ventures" and certain discussions,
how would you characterize that sort of networking daisy
chain?

A I would just say it ' s a finder's fee type of
arrangement. Somebody helps you put a deal together, and
depending on what your exact role is, if the deal goes
through, they would get a percentage of that particular
transaction.

Q Did you discuss in the early stages of a particular
deal what percentage the finder's fee might be?

A No.

Q Was it understood to be a flat rate then? '

A No. It was understood that if we got beyond I
the point of these basic inquiries, my experience has been |

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that there are so many of these, and 99 percent of them
don't go anywhere, that it's ridiculous to structure anything.

In other words, if you simply send off a
telex to make an inquiry and nothing happens, you don't do
anything. And that is what happened to most of those.

As a matter of fact, that's what happened to all
of them.

Q You're sort of relying on each other's good faith,
that if you strike oil, so to speak, you will be fair to
each other in parceling out your commission?

A Right .

Q I notice that a number of these deals involve
Portugal in one way or another, and I use that observation
to ask you whether you ever discussed Portuguese officials
or made introductions or referrals between Portuguese
officials and Tom Clines .

A No.

Q Looking now at number 166 — page 166 , in the
SUM file ~ this particular one happens to be dated 21
November 1984, the day on which we know you were in Europe, |
and this is from Jameson to somebody in Portugal on behalf of
yourself and Mr. Ledeen; is that correct?

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A Let me take a look.
(A pause.)

Yes, that's what it says. It's to a company to
look at an oil transaction. It would be a trade of commodities
for oil.

Q This particular oil is Iranian oil?

A Yes.

Q And you're talking to 2 million barrels at
$22 a barrel?

A Yes.

Q Does the fact that Ledeen's name appears on this
document indicate that he is dealing with you on the deal as
a co-ccxnmission?

A I would say that, based on that, that he and
Jameson had a conversation — let me see if there's anything
else in there — that they had a conversation, and on the
basis of that, one or the other decided to — this makes
reference to another message.

Without going back into this thing, it makes
reference to Mr. Miranda. Mr. Miranda was the head of the j
Portuguese Oil Company, and I don't know what prompted this
particular one, but obviously, Miranda was asking that [

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Jameson go back to this particular guy and spell out the
deal.

Q All right. Now I gather that Jameson is answering
for you and Ledeen, since you're not there.

A Yes. He's amswering in a generic sense, yes.

Q Was Ledeen also there?

A That I don't know.

Q And on page 173, we have a very similar document,
this one referring to Saudi light up to 50,000 barrels per
day at $27.85 a barrel.

Is this another feeler type?

A Yes. Let me just see it. Yes, that's another one.
I would say, on the basis of that, that's something that
Ledeen came up with. Sent it to Miranda, the fellow at the
Portuguese Oil Company.

Q So would it be accurate, in the vernacular, to say
that Ledeen is sort of bird-dogging the deals for you?

A No, he wasn't bird-dogging for me. If he found a

deal and he thought I could help out, or I was the best one

with facility for helping out, he would come to me. That

t
doesn't mean he wasn't dealing with two or three other

people at the same time. !

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Q Page 176. Another Iranian crude deal. This one

is 300,000 barrels per day for a year. That's a sizable

chunk of change, isn't it?

A It would be, if it went through.

Q My little math that I did when I read that indicates

we're talking about $2,682,750,000.

A Yes. But very few of those go through. Yes, that

looks like another one of these deals that he has picked up

and had come in and again went to Miranda. Probably one of

the reasons for that is, he introduced me to this fellow

Miranda, so he thought that was something that Portugal would

like in the oil deal and probably came to me.

Q What type of percentage are you talking about as

a finder's fee on a deal like that?

MR. MC KAY: None of them ever came to fruition.

MR. HOLMES: I know.

BY MR. HOLMES:

Q What is the industry standard?

A There is no industry standard. In other words,

at that time, when it was $20-scaie-odd a barrel, probably }

i
would have been lucky, if you could have gotten, say, 2 or i

3 cents. ■

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Q On the dollar?
A No, on the barrel.

Q On page 179, there's a reference to an ISI, and
in parentheses, "President Michael Ledeen has located a gas
supply . "

What is "ISI"?
A I have no idea.

Okay. That was essentially a deal that Jameson
and Ledeen worked on, which basically, after I got into it,
T. didn't think there was anything in it and walked away from
it. They pursued it for a while and got a lot of heartburn
from it.

Q This is the deal you were talking eUsout the other
day that Jameson and Ledeen did separately?
A Right.

MR. MC KAY: Let me state this on the record.
We're never going to get through here. His
question is, what is ISI. You don't know what ISI is, wait
for the next question, because he may not have any interest
in it.

BY MR. HOLMES:
Q Did you ever discuss Portuguese government ties

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with Secord, as apart from Clines?

A No, not that I can recall.

Q I'm going to show you page 180, dated 1 March of
'84, and I want to ask if you recall this deal. This is
another fairly sizable deal, if it wwent through, of course.

A No, I don't recall this specific deal. That was
your question; right? Do I recall the specific deal?

Q Right.

A No, I don't recall the specific deal.

Q This one is from Michael Ledeen. Do you know
whether you had anything to do with this deal?

A No. It looks —

Q I assume, since he's signing off as TGS
International, he was doing it at your office; right?

A Well, that looks to me like we transmitted this
for him. He needed to send a telex, and we sent a telex
for him as an accommodation.

Q Do you know whether anybody in your office had
any part of this deal?

A I don't recall that particular transaction, and I |

I
would say, given the way that message is set up and one i

thing or another, I would assume we did not, that we were '

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simply acconmbdating Ledeen by transmitting a telex for him.

Q Do you know whether anybody in your office had
any conversations at all with any Japanese during this
period of time, early in 1984?

A No, I don't recall our being in touch with any
Japanese.

Q With whom in Portugal is this deal being done?
I see that it's —

MR. MC KAY; I'm going to object. The document
speaks for itself. The witness says he doesn't know anything
about the deal. It's a matter of interpreting what is
written down.

MR. HOLMES: I don't know how to interpret this,
so I'm asking him.

THE WITNESS: That address is not the address of
the Portuguese Oil Company.
BY MR. HOLMES:

Q You have had a chance to read this document. Can
you tell m« what business purpose would be served by this
arrangement they are discussing?

A Let me read it again. I was looking at it from
a different point of view.

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(A pause.)

I don't know. I can't help you on the basis of
that.

Q Why wouldn't Nigeria simply sell their oil
outright to the Japanese under the circumstances described
here?

A It depends what the quotas were at that time. I
mean, what year is that? That's '84. You'd have to do an
awful lot of research to try to get an answer to that.

You'd have to go back and see what the Nigerian
OPEC production quota was, whether they were in excess of
their quota at that particular time, whether this was a
way they were trying to circumvent the quota. A lot of
cheating on quotas.

Q So you're speculating that perhaps the business
purpose, widely defined, being served here, is the business
of selling on the free market instead of obeying the OPEC
quota?

A It's conceivable that they could be selling on
the world market in excess of quota, and this is a mechanism
to permit them to do that.

Q And they're willing to let go of the ten percent, i

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in order to accomplish that purpose?

A It's quite common.

Q 10 percent in this case, being $98,550,000.

A Quite common to discount.

Q Do you know whether ISI had anything to do with
the deal described in page 180?

A No.

Q I'm showing you page 111 from the Albert HaJcim
file. I just want to flip past these. I gather from the
fact that for a number of months in a row, the figure being
billed comes up to $5065, totaling up the consultant's
salary, secretary, office rent, parking refund for the
month, that was a fairly flat rate between yourself, for
yourself as RAI and Albert Hakim, as Triangle Associates,
during that period of time in '82?

A Yes, because one of those consultant salaries, I
told you, I administered^^^^^^^^^H There was a secretary
that he used, office rent, parking, the retainer for
December. That was what he was paying, essentially, RAI,
for papers that were being prepared for him.

Q So the consultant being referred to here is

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A Right .

Q And the retainer is something RAI is getting, in
addition?

A Right.

Q And that apparently continues through July '82,
anyway, the same general setup?

A Yes, the same basic formula.

Q Now, this one is dated March of '82. When did
this arrangement begin, when did the^^^^^Hconsultancy
with Hakim begin?

A I don't know. Maybe I can tell from looking at
the file.

Q That's probably the earliest one in there.

A Let's see if I can tell from that.

Q You're looking at page 126?

A Yes. Let's see. It's the billing for January,
consulting fee, February. I would say it must have started
about then.

Q I'm assuming that since the subpoena goes back
to January of '82, that's why it ends there.

Right.

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Q So I want to know if it was in existence before
then.

A I really couldn't tell without going back. I
don't have all these numbers in my head. I couldn't tell.

Q In page 15 is an example cover letter of an Albert
Hakim financed RAI/Iran/Iraq War information: is that right?

A Let me take a look at it.
(A pause.)
Yes.

Q And what follows is the intelligence itself?

A Yes.

Q On page 24, there's a reference to Bell helicopters
from American Bell to its Italian branch.

Are these the S2une helicopters that we talked
about before?

A Let me see.

Q These are destined for Iran, apparently.

A No, I think that's a different thing. That was
a carryover going back from what I remember, going back to
the days of the Shah. That's some equifsnent that was sold
to the Shah but had not been delivered.

Q So it was already purchased, and there was no

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further need for the helicopters, was there?

A I think what happened is that Iran bought a lot
of the equipment, but when the Shah fell, the equipment was
in the pipeline and that equipment wasn't delivered, and a
lot of those have subsequently been arbitrated.

Q Do those helicopters or the promise to deliver
those helicopters have anything at all in common with the
helicopters that we were talking about relating to Central
America?

A No. And they have nothing to do with the
helicopters we were talking about for Korea.
THE WITNESS: Can we take a break?
MR. HOLMES: Sure.
(Recess. )
BY MR, HOLMES:
Q Mr. Shackley, looking at page 66 of the materials
you provided, there is a reference to a joint venture to
sell Stanley Vidmar products in Egypt. This is a memo by
yourself about a meeting with Mr. Hakim in New York.
A Right.

0 My question is, whatever became of the joint
venture you were discussing with Hakim in New York?

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A Nothing. We gave him some material on the
Stanley Vidmar data. He cast it in front of whoever were
his Egyptian contacts. No response.

Q This related to the modularized storage?

A Right.

Q And on page 75 — this is a telex to Hakim —
no, it's from Hakim to you, referring to a meeting a week
before. That would have been in October of '82 in Geneva,
about crude oil and the Iranian government. Could you tell
me more eibout this deal, after looking at the document?

A It looks like he was proposing — where is the
answer?

Q I'm not sure we have the answer.

A That doesn't bring back any memories of anything.
Certainly, no deal was concluded as a result of that. I
don't know what the specifics of that are.

Q There is another reference on page 79 to either
another Iramian crude oil deal or perhaps the same deal in
a different reincarnation, and another one on page 85,
an Iranian crude oil deal with several potential buyers on
2 September.

Would it be accurate to say that simply you and
Hakim were inla similar relationship as yourself and Ledeen,

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in that you were both seeking to broker crude oil deals
in the Middle East during this period of time?

A Yes. And, you know, if a deal had gone through,
we would have worked out some sort of arrangement, depending
on who did what.

Q And would it also be a fair observation to say
we're talking about a fair amount of money in these deals
as well? The one on page 79, for example, is 200,000
barrels a day or 12 million barrels, at a time when the price
was in the $25 a barrel price range.

A Yes. But those are the kind of purchases that
refineries do make.

Q Sure. Which makes it very attractive, if there's
a possible financial venture.

A But a lot depends on how the deal is structured,
what you get out of it.

Q Is it your testimony that no deal like that
ever went through for you?

A No deal went through.

Q Do you know whether any deal of that level ever

t
went through for Hakim? '

A I never heard him say he put one through. j

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Or Ledeen?

heard
No, I never /Ledeen say he put one through.

Q Looking at page 5 inthe Aspin file, a letter
written to "The Observer" by yourself, it refers to a
chance encounter with Ghorbanifar. If I haven't misunderstood
you, your encounter with Ghorbanifar wasn't exactly a chanie
encounter; you were specifically to meet with him.

A I went there to meet with an Iranian, not
identified. I didn't expect to meet Ghorbanifar.

Q But it was not by chance that you met him. It
was by design. It just wasn't known to you which Iranian
contact you were to meet.

A Well, I didn't expect to meet Ghorbanifar, because
I thought I was going to meet somebody from Iran. The first
person I met is Ghorbanifar, who was living in Western
Europe and is not a current vintage Iranian.

Q But he was produced for you, specifically for
the purpose by^^^^^^H wasn ' t he?

A ^^^^^^Hintroduced us to him, and then it turned
out that Ghorbanifar was the individual who brokered the
meeting with the Iranians from Iran. But I hadn't expected
to meet Ghorbanifar.

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Q It was your understanding, Ghorbanif ar ' s role
at the meeting was simply to act as a go-between between

A Yes. I had no anticipation of meeting Ghorbanifar.
In other words ^^^^^^^Htold us, "I want to introduce you
to some interesting people from Iran."

So my mind set was, whoever we were going to
met was going to be coming from Iran. But the first guy
he introduces us to is Ghoribanifar, who is an Iranian
exile.

So to me, that was a chance encounter. I mean,
I had no intentions of meeting Ghorbanifar. And as far
as I know, he didn't have any intention of meeting me.

Q Well, he had the intention of meeting an
American.

A Well, you know, that's what I don't know, what
his arrangement with^^^^^^fwhat^^^^^Hhad told
him whc^^^^^^^^^^Lnd I were that were coming into this
particular meeting. But as far as I was concerned, the
meeting with Ghorbanifar was purely by chance. I didn't
expect to meet him. 1

Q All right. If you choose to call that a chance I

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encounter.

A Yes. What I'm trying to say is, I was focusing
on meeting somebody from Iran, not a Ghorbanifar type,
whether it was Ghorbanifar or Mr. Blue or Mr. Green or
what.

Q What is a "Ghorbanifar type"?

A That's an exile living in Europe.

Q I'm looking at page 197. I don't want to spend
any time looking at it. It refers to a contact with Air
Force personnel, and I gather from it that you were a
lecturer from time to time on counterinsurgency in low-
intensity conflict.

A That's correct.

Q Do you have other similar roles with other
government agencies?

A Not any more. I have pretty well given that whole
thing up. You know, I can't afford any time.

Q When you were doing it, were you doing it for
others besides the Air Force?

A The Air Force and Eglin Air Force Base and
Maxwell Field. I was supposed to go out to Fort Leavenworth
at the College there, but something happened, and I couldn't

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keep that one.

Q Have you some channel to Nicaragua, or did you
have, in 1984?

A No, I have no channel to Nicaragua.

Mr. Jameson has been in touch with a number of —
what are you referring to?

Q Well, I'll show you. It's pages 203 and 204, and
it refers to an oil deal in Guatemala. Are you familiar
with the discussion involving that oil deal?

A Well, I'd have to see that to see which one
you're referring to.

Q This meeting with Givardo somebody and Felix
Rodriguez.

A There was a meeting between Mr. Jameson and these
people, and I remember that there was a discussion of oil
activity. That was at a time when Guatemala was just coming
into the world oil market.

MR. MC KAY: You said Nicaragua. Did you mean
Nicaragua?

MR. HOLMES: Yes.
BY MR. HOLMES:

Q What was it about the Foreign Corrupt Practices

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Act that caused Mr . Jameson pause?

A Well, I thi-ik he wanted to make sure that whatever
was done was no violation of the Foreign Corrupt Practices
Act. That's basically what he's saying there.

Q Did he discuss with you that he felt in some
way impinged by the Foreign Corrupt Practices Act?

A No. But this is a standard kind of thing you
need to be concerned about when you're looking at concessions.
His concern was what was Mr. San Pedro's position in
relationship to the Guatemalan government.

Q I can imagine his concern.

A Yes.

Q Now on the next page, in the middle of the second
paragraph, it says, "I mentioned my interesting channel
to Nicaragua and proposed, which he accepted, to pass word
of this on to Daniel Ortega via Senor Lopez to see whether
that might help in getting at least the crew and other
personnel freed." talking about the crew of a ship seized
off the Pacific coast of Nicaragua.

A That was a ship belonging to San Pedro that was
seized, I believe; right?

Q I believe so.

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A And Jameson had a contract, I think — I don't
know whether he's still got it — with the people that put
him in touch with Daniel Ortega.

Q What is this "interesting channel"?

A That's what he's talking about, the person who
put him in touch with Daniel Ortega.

Q Who is it?

A I think it's a woman by the name of Jahilma, I
don't know how to spell it. We'll just have to go
phonetically. It might be something like J-a-h-i-1-m-a.

Q What was her role in the Nicaraguan government?

A I don't think she has any role in the government.
I think she's a longtime friend of Daniel Ortega, a female
friend.

Q Do you know whether she has been contacted in the
last year and a half by Secord, Clines, Contaro Company?

A To the best of my knowledge, they're not aware of
her existence.

Q On page 215, we find reference in the Nava file,
the International Security Consortium that we have already
discussed. Mr Jenkowitz.

Jenowitz .

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Q Jenowitz?

A Yes.

Q Had been contacted by Mr. Nava, who was interested
in discussing the concept of an International Security
Consortium with Mr. Nava and Mr. Radai, which Mr. Nava and
Mr. Radai are pushing.

My question is, is that the same consortium we
talked about earlier?

A Right, the same consortium.

Q Which nations were planned to be involved in
that consortium?

A Well, I think they were just taking soundings at
that pirticular point in time. I think the United States,
Canada, Britain, Israel.

Q I'm reading on page 302, a memorandum for the
record by yourself, memorializing the fact that a
Mr. Ferrera contacted you and discussed an Iranian arms
purchase through Portugal.

Do you recall that?

A Let's see. I don't think it's an arms —

Q It says "Iranian arms purchases."

Yes,

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Q Who is Mr. Ferrara?

A He is a Portuguese fellow who, I think, probably
has dual citizenship. He lives part of the time in England
and part of the time in Portugal. You'll see he has been
involved with me in attempting to do an oil deal with
Portugal.

Q All right. This memorandum also refers to a
Mr. Chartier in Paris.

A Right.

Q Is he not a representative of Trans-World Oil?

A Yes, he was employed by Trans-World Oil at that
time in Paris.

Q And, if I understand what's going on here, Iran
is purchasing arms and needs the cash to do so and is raising
the cash by selling oil?

A Yes. But those aren't necessarily linked.

Q Well, they're deliberately unlinked, according to
other memoranda; correct?

A No, they're not deliberately unlinked. It's just ;
that most oil companies will not link themselves to any
specific transactions dealing with weapons. You're selling •
oil. If the country then who sells the oil, Iran, generates}

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cash from that and then decides to buy weapons, then that's
what they do.

Q But as a matter of practicality — and it's
reflected in maybe memos within this little packet here —
certainly some of these memos, if they don't get the oil
sold, they don't get to buy the weapons.

A That's a problem for them. Their main export is
oil.

Q Sure. And : the big dollar import is weapons.
So the two are inextricably linked in economics?

A Yes , but not necessarily in the transactional
sense .

Q Now, this memo on page 302 also refers to a
Nigerian deal. Does this Nigerian oil deal have any
connection at all with the previous Nigerian oil deal we
saw involving Ledeen?

A No.

Q Is it structured in the same way?

A I don't think so. No. This is an entirely
different kind of a proposition. I forget what year that
was. Remember, looking at the previous one, this is '86.
In the meantime, there have been one or two coups in

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Nigeria and part of the problem here was to open up a
dialogue with a new government in Nigeria on oil matters.

Q Who is Fatanmi?

A He was some individual — I don't know him. He
was some individual Mr . Ferrara was recommending to me or
mentioned to me .

Q And this Dr. Fatanmi is somebody you were hopii^g
would put in touch with the new government in Nigeria, in
order to broker oil?

A Open the door for oil discussions . Does it
mention Babaginda in here? Yes, by this time, Babaginda —
General Babaginda had become the head of the government in
Nigeria.

Q So the commercial triangle that his refers to is
Nigerian oil, a Portuguese refiner, and Trans-World is the
ultimate purchaser of the refined product; is that correct
or not?

A That was true on the Iranian oil. The Nigerian
was simply to open the door with the Nigerians, to start a
discussion with them. It was not structured in the same
way.

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Q And if the door was opened, what would be done?

A Depending on what could be negotiated. In other
words, what did the Nigerians have to sell, how much, what
were they willing to do. You know, back in one of these
other things I think you see I did try earlier on in some
earlier period to deal with the Nigerians through the
Portuguese, but it didn't turn out to be possible. This is
simply an attempt to see if Mr. Ferrara had any contacts
with the Nigerians. It was not structured to the Portuguese
market.

Q You were in touch with the Portuguese on a
broader range of issues than simply oil and oil refining,
weren't you?

A No.

Q There ' s a memo here , page 3 of 3 , in which you ' re
talking about training the Portuguese VIP protection —

A That was with Mr. Ferrara.

Q The same guy?

A Yes. He asked me one time, if it would be

possible for me to put on that kind of a program.

Q Now, Ferrara is a quasi-government official, ;
isn't he? He's president of Disarma, which is their ;

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stat^-owned --

A I think he is a representative of their state-owned
company. He has an independent company, as I understand the
structure.

Q This page 303 refers to him as president of

Disarma.

A Right, And I think Disarma is an independent
trading company. I don't believe it's ovmed by the
government.

Q Did you look into, as a matter of fact, training

VIP protection units?

A I talked to one or two people here in the States,
who would have helped me put together a program, but it
never worked out, timewise.

Q Now, page 305 is, I think, what you were talking
about a moment ago in the Petrogal/Iran crude deal?

A Yes.

Q And Petrogalwas doing the refining and Trans-World
was doing the purchasing of the refined product?

A Right .

Q So, as of early '86, you were financially in the
business of dealing in Iranian crude?

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A That deal was a product deal. Petrogal would
refine it, and we would take the refined product.

Q But unlike the unlinked arms deal we were talking
about before, this is totally linked? No crude, no refined
product?

MR. MC KAY: Linked? It's just an oil deal.
BY MR. HOLMES:

Q The linkage between the refined product and the
crude .

A Yes. The Iranian crude is sold to the refinery.
The refinery refines it, gets a fee, sells the product to
a distributor like Trans-World, who then puts it in the
European market hoping to sell it for a profit.

Q In this particular deal. Trans World wouldn't be
obliged to pay anything until the refined product was
delivered?

A Yes; that's correct.

Q And it wouldn't be delivered unless the Iranians
delivered on their part.

A Right.

Q Isn't it true that it was during that period of
time, early 1986, the Iranians were desperately in need of

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funds from their oil production?

A Basically, in the last couple of years, they have
always been desperate for funds, and they had ebbs and flows
of desperation. They would send delegations out.

Q Reading from page 307 now, this is a memo written
and initialed by yourself on the Petrogal deal. It says:
"Mr. Shackley told Mr. Chaurtier this might
not be the end of the deal for Mr. Ferrara.
I just returned from a meeting with the
Iranians in Switzerland. The Iranians
were saying they needed funds desperately
and wanted to put through an oil deal with
Portugal. The Iranians had also told
Mr. Ferrara that if they could not put
through such a deal, they might not be
able to buy munitions from his firm."
That's Ferrara' 8 firm. So the Portuguese needed
the Iranians to be able to deliver crude, so that the
Portuguese could sell the Iranians munitions?

A Yes. But I think what I was focusing on was the
desperation. What I was trying to question was to say that
there are these ups and downs and during this last couple of

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years there certainly have been a lot of those periods. That's
what I was trying to get across, because you were sort of
zeroing in on that.

What I was trying to say is that that is not an
isolated case.

Q Oh, no, I didn't mean to imply that, it's an
isolated case. I'm just pointing out for the committee's
purposes that Portugal wasn't simply a disinterested bystander
in all of this. They were commercially entwined with Iranian
oil and that they wanted to sell arms to Iran and needed to
have the countertrade occur, in order for that to happen.

A Yes. That's part of their equation.

Q Did Mr. Ferrara ever get a finder's fee or any
such like from Trans-World?

A No. Because no deal went through.

Q But if it had gone through?

A If a deal had gone through, we would have to have to
have given him a fee.

Q How are those fees arranged?

A In what sense?

Q Physically, how are they made?

A He would have gotten some percentage , depending on

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what the valuation was and would have gotten a check.

Q Did you ever discuss with Trans-World the concept
of doing Iranian crude deals via European cut-outs, so
called?

A Let me see what you have reference to, because I
don ' t know whether —

Q Why don't you take a look at page 332, titled
"Iranian Crude Deals Via European Cutouts."
(A pause.)

A yes. It talks about a storage agreement and using
places like Portugal as a way of putting those together, as
a sale.

Q What is the applicability of the term "cutout" to
this arrangement?

A It's simply the Portuguese entity is in between
Iran and the person who gets the end product, the refiner.

Q Well, maybe I'm reading something into it from the
vocabulary that we have been introduced to on this committee,
but when I heard the word "cutout" used, it's in the context
in which the parties on either end of the transaction don't
want to have some connection made between them. The party
in between is called the "cutout."

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Am I to gather that Trans-World is somehow
unwilling to have it be known that they're buying Iranian
crude, or is that just a misfortunate use of the wor^d?

A I think it's a mis£ort\inate use o£ the wof||ii.
Your definition of "cutout" involving the intelligence
context is correct. This is an entirely different context.
In the oil trading business, it's just somebody in between
that the producer and the eventual seller of the refined
product .

Q What aren't they referred to the intermediary
refiner?

A Maybe my vocabulary has been corrupted by 30 years
of the government. I'm sure that's permitted.

Q In the deal that's under consideration in this memo

of June '85, is there seme commercial purpose for using
Portugal, when Portugal would be able to turn around and
resell the crude without ever having teJcen delivery?

A What period of time was that again?

Q June '85.

A It might have been a time when Iran would have been
more willing to sell to a small country like Portugal than it
would have been to some other countries.

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Q Like, for example, the United States?

A Or, say, at this particular point in time, they
might not have been willing to sell to France.

Q So they were willing to deal, say, apparently
Ireland is mentioned in here.

A That's another one which we were aware of that had
transpired. We played no role in that. I think what I was
saying is that we had heard of such a deal; is that correct?

Q Yes. It's just a reference to it here as another
deal the Iranians had done by the same general method. They
recently concluded a transaction of this type with the Irish
National Petroleum Corporation in Dublin, which worked out
to everyone's satisfaction.

A Right.

Q Is it an unspoken understanding in this memo that
the 23 U.S. dollars a barrel is going to be different than
the world price of oil at the time?

A No. Let me read that. I don't —

Q Go ahead and read it. It says:

"The Iranians will sell the crude to

Portugal" —
I don't know how to pronounce that —

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" — for 23 U.S. dollars a barrel or some
other agreed-on price. At this price
level, Portugal would be able to sell
the crude at a profit."
Meaning that this a price below the existing
world price?

A It could have been a dollar below the market that
the Iranians were discounting at that particular time.
Q And their motive for discounting it is what?
A To move it. In other words, to move it or to
increase- their sales to new markets in excess of their
quota, their OPEC quota, finding new markets which will
take their crude and increase their volume and get more
revenue .

Q So here again is the OPEC quota problem that's
being circumvented?

A The OPEC quota is constantly a problem to the
producers .

Q All right. And is it true, from your knowledge
of this deal — and I gather you have knowledge, you have
written this memo — that this $23 price is a — I don't
wamt to say your official price, but as an economist, an

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OPEC quote is not an artificiality.

A My guess is, that probably represents some sort of
a discount at that particular time. But, you know, to get a
real ironclad definitive answer, it would take hours of
research .

Q I gather that from time to time you have had
requests for referrals relating to armaments and have made
the appropriate referrals?

A I think I told you that I personally have never
handled anything that booms or bangs. Now, if somebody comes
to me with something like that, I refer it to somebody else
as a courtesy or favor.

Q And that would, I assume, apply, especially for
Portugal, since you were dealing with Portugal on a regular
basis?

A I was dealing with Mr. Ferrara and Petrogal. Those
are the limits of my real contact with Portugal.

Q Did you ever have any contacts with a company
named Defex — D-e-f-e-x?
A No.

Q Did you ever have any contact with an individual
ncimed Brito — B-r-i-t-o?

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A No.

Q Or a Jose Carnel?

A No.

Q I wonder if you considered a finder's fee possible,
when you made referrals on munitions deals?

A I never got any finder's fee. I mean, if I had
referred such a deal to somebody, and they had given me a
finder's fee, I probably would have accepted it, but I
don't think I ever got one. I know I didn't get any finder's
fee.

Q Looking at page 337, it says, at the end of the
memo about a referral of a Thai military ammunition
requirement .

"If scMnething contes from this from the
Thai side, there's a finder's fee in
this package."
That's a fee for you; right?

A Probably, if the Thais had pulled it off or
something, I would have expected that somebody would have
said, okay, he helped us put a deal together, what can we
do for you? Probably a finder's fee.

Q And this is just the way the international

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business community works?

A Right.

Q So sort of daisy chains on daisy chains?

MR. MC KAY: Is "daisy chain" a term that you use?
THE WITNESS: Yes. "Daisy chain" is an industry
term in the oil industry.
BY MR. HOLMES:

Q What is BYIEX Trading Company — B-Y-I-E-X?

A I think that was a company that Ghorbanifar said
he was the president of or that he represented.

Q Did he say what they did?

A No.

Q Do you know if it exists?

A I think somewhere in there, there's some —

Q I think you did a check or something.

A No. I think it turned out that he really didn't
have anything to do with the company.

Q Here on page 470, somebody is answering you
back that there is no record of any Ghorbanifar in Paris,
and inquiries in local oil circles have failed to identify
Ghorbanifar as being a trader or intermediary for Iranian
oil or crudes.

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Who is this answering this back?

A That's a fellow in Geneva who does checks for me,
that works for me.

Q Who is he?

A Well, his name is Gerber, Conrad Gerber.

Q Did you ever find out, to the contrary?

A To the contrary, what?

Q Did you ever find out that Gerber is wrong about
this, and Ghorbanifar was involved in crude oil deals?

A No.

Q So if he was dabbling oil and his real business is
arms —

A I don't know what his real business is, because he
did not introduce himself to me as an arms dealer, and I
think if you read through those memos, you know that my
inquiries about him show that the people 1 .talked to
certainly did not know him as an arms dealer.

Q Did you ever confirm that Ghorbanifar had worked
for SAVAK?

A Yes.

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Q When you were talking with Ghorbanifar, what
specific Soviet equipment did you refer to?

A I don't have any recollection of that, that it was
just Soviet equipment.

Q Do you know whether it was tanks?

A That I can't — if it had been something specific,
I would have written it down. What did I say? Soviet
equipment?

Q "Interesting Soviet equipment
A That's probably as close a translation of what he
told me as I could capture.

Q I'm going to have you read this sentence on page
478. I'll read it to you, so the record will pick it up.
It says:

"On the other hand, the new oil companies
could be generous, and if there was a
humanitarian deal to be made, in simply
terms, with adequate safeguards for
life and funds, we woulc i^e willing to
take soundings with our oil company
clients and contacts, to see if a deal
could be structured."

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Forgive me, if I'm reading more into it than exists,
but it sounds to me that you're talking a little bit
euphemistically .

Could you tell me what you mean here by "oil
companies could be generous"?

A Well, you have to put that into some context.

Q Yes. That;s why I'm asking you the question, so
you will do that.

A Yes. The context was, he raised the question of
the Americans in Lebanon.

Q Yes. This is right at the end of your memo on
that.

A I responded by saying that it would be interesting
to find out what the status was. He flippantly said, "I
assume you're talking about tractors for prisoners exchange."
And I said, "I don't have anything specific in mind."

Q When he says "tractors," he's talking about
TOWs?

A No. Tractors. I think what he was talking about
was the John F. Kennedy exchange of tractors for Cubans at
the Bay of Pigs. It's a well-known international trans-
action and most people referred to that. So I think he's

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a very flip kind of guy, and so when he says, "Wel^, oO we're
talking about tractors?" And I said, "No, we're not talking
about anything. I'm interested in oil, and if some sort of
deal can be structured for humanitarian terms, and so forth
and so on, that's something I'll take up, or I'll take up
with our oil ccxnpany clients and contacts, if a deal could
be structured."

I wasn't going to commit myself to anything.

Q Spell it out for me, because I'm still not — 1
don't understand what Ghorbamifar means. Tell me exactly
what you mean by that.

A Well, that's an elliptical response to an
elliptical question. There's nothing to explain. He says,
"Tractors for prisoners," and I say, "No, I'm not thinking
of anything, but people can put these kind of deals
together, and if you know something specific, I'll consider
it. I'll take soundings."

Q What role were the oil ccanpanies supposed to play
in this?

A I think that was an elliptical response on my
part, simply to the exchange that was going on at that
particular point in time. In other words, as you can see

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by my actions, when he qualified this thing, and what I did
was write a memo and go to where I thought was appropriate.

Q To the U.S. government?

A And specifically to the State Department. And I
still think that's the right thing to do.

Q Did you ever make any person affiliated with
any oil ci^npany aware of this situation?

A No.

Q Of course, other than yourself, because you
were there on Trans-World Oil business at the time. But
I mean, other than yourself, did you mean this sentence
about oil companies to i]nply to Ghorbanifar that you would,
in fact, contact any oil companies?

A No. I told you, he was being flip, and I don't
know how else to put it. He was being flip, gave me a
flip response, and I gave him an elliptical response,
noncommittal. In other words, I would look into it. People
can be generous, you know, something aJsout these. It's
a humanitaurian thing, you know, sit, discuss it, and we'll
look into it, and I will take note of it. That's not a
ccxnmitment.

Q Oh, I understand that. I'm wanting to know why

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you were referring to oil companies a couple of times.

A Because we had talked about oil, and my rationale
for engaging in the dialogue was to orient myself on the
general Iranian market, which is a very substantial factor
in the oil industry, and I wasn't making any secret of that.
There was no reason for me to make any secret of it. You
know, conversely, I had nothing specific to deal with at that
point in time. In other words, he hadn't said that the
following two guys, one guy, two guys, three guys, are
available. He just made this generic statement, so I made
an elliptical response, which is the noncommital to keep the
dialogue going. Nothing more complicated than that.

Q So you wanted him to understand that you picked
up his feeling as a commercial person that the hostages
were an obstacle to trading between the West and Iran?

A No. I had no broader motives. I think you're
ascribing to me something broader. You are trying to make
something out of this that wasn't. It's a very quick,
flip exchange, that's all, and I wanted to keep the dialogue
open and told him that it was a humanitarian item, if he
would do something about it, could do something about it, j
that this would be something I would be interested in

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el5

listening to.

Q You said, .in response to a previous question,
you made no bones about being interested in oil.
A Right .

Q I would like to develop oil-related commerce.
A No, I wanted to be informed on the oil market,
in terms of what were the circumstances. I made no
commitment that I was going to buy X or that I would
pursue Y for a refinery or anything else. This was a
feeling-out process. It happens all the time.

Q On page 480, the same set of memos, you say:
"Ghorbanifar has no known intelligence
connections with any Western
intelligence service."
What is your source of that information?
A Talking wit^
Q How would they know?

A Well, you know, this is the kind of question I
put to them. "What do you guys know about this guy? Have
you ever heard anything about him?"

These people talk about each other all the time,
and there is an international grapevine. I just wanted to

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know if he had heard anything.

Q Had you put out any feelers to any Western
intelligence agencies, before you wrote that?

A No.

Q And I assume that's why you didn't find out that
he had connections with the CIA?

A I wouldn't have any way of going to the CIA,
because when I came back, you can see the 'time. I was rather
prompt, wrote it, hand-carried it, took it to the State
Department, and I deliberately did not go to the CIA. 'I
had no reason to go to the CIA.

Q I'm going to ask you a general question, and
really more by way of flagging this spot in the transcript
than anyplace else.

This file folder marked "William Buckley," which
is pages 459 through 489, contains your memoranda on the
subject of Ghorbemifar.

A Right .

Q And these are the memoranda you wrote at the time?

A That's correct.

Q On the subject of oil pricing, what commercial
value would the information have, if the person were to find'

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f.JfL ,
out that Iran was dealing with the United States in missiles,

with an eye towards future commercial development?

A What impact would it have on the oil market?

Q Yes.

A None .

Q Zero?

A Yes. My initial reaction to that would be zerc3.

Q Why is that?

A Because it doesn't change anything. If you're
dealing with the United States on missiles, so what? I
mean, you have to look at, would that change the balance of
the power in the war .

Q Well, as a matter of fact, the price of oil went
up quite rapidly after August of 1986, didn't it?

A Well, 'getting to the period of August '86, when I
was out of the market, this is a time when I'm finishing
up all of my medical testing, and so forth. I'm getting
ready to go to the hospital, so I'm beginning to be out of
the market at thfit particular point in time. I don't
remember any large surge in prices just before I went to
the hospital.

Q What knowledge do you have, if any, of any trading

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done in oil-related stocks or similar transactions by
anybody within the circle of those who knew or could have
known about this Iranian initiative?

A None .

Q You have heard no industry riainors that there was
any insider trading of any kind relating to this initiative?

A No, I haven't heard anything like that.

Q Do you know a guy named Maurice Rehm — R-e-h-m?

A Yes.

Q How did you first contact him?

A I didn't contact him. He contacted me. From
what I recall, I think I got a phone call from Ambassador
McCormack. He said he had been talking to this fellow
Rehm, and he would appreciate if I would talk to Rehm and
see if I could give him any advice as to what he should do.

Q What did he tell you Rehm had told him?

A Nothing. He said he wanted Rehm to come over and
see me, and I made some arrangements.

Q Where was he the ambassador at that time?

A I believe he was the ambassador to the OAS.

You'd have to check that. I'm not absolutely
sure. He had several jobs at the time. He was an assistant'

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secretary, and I don't remember what period. It sticks in
my mind, he was the ambassador to the OAS.

So I agreed to talk to Rehm. Rehm Ceime to my
office, introduced himself, told me a little bit about
himself and gave me some papers, the copies of which you
have there, and I told him that there was nothing I could
do for him.

He had some interest in an airline in Africa, and
I told him the place to work on that was with the State
Department, which he did.

Q You had never heard of him before?

A Never heard of him.

Q And his other interest was in supplying the
contras by air drop?

A Right. And I told him I had nothing to do with
it, I'm retired, I can't help you.

Q He supplied you with a proposal; is that right?

A Right. He insisted on leaving those papers with
me.

Q This is August of '86. It was actually earlier.
His close out letter to you is August '86.

Right.

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Q His first contact was more like July of '86. He
had a business called Connor Airlines; is that right?

A I don't think that was his business. I think he
worked for or was associated with Connor. I think there's
some data on Mr. Connor in there.

Q Yes. What did he tell you about Connor.

A He said he's an independent air operator, very
capable, had the capacity to expand his air facility and
was interested in being helpful.

Q Do you know anything more about the Regina Group
Limited and the fact it occurs on Mr. Rehm's business car?

A All I know is right there.

Q Now I gather that it has made some impression on
you. This is around the beginning of July '86 that you had
met with Mr. Rehm, since you immediately wrote a memorandum
to the file.

A Right.

Q And you referred Rehm to Colonel Ollie North in

the NSC; right?

A What did I say there? You got to talk to somebody "
like North or something to that effect?

Q "In view of this, Mr. Shackley" — and this is you '"

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writing to yourself in the third person — "felt that
the only advice he could give Colonel Rehm was for him to
try to see Colonel Ollie North in the NSC, who had recently
been identified in the press as the main player in whatever
the NSC was doing to provide assistance to the contras of
a humanitarian nature."

A Yes.

Q Now, what was it that was humanitarian about
Mr. Rehm's proposal?

A Well, I think he was interested in doing what he
could to be helpful, and the only thing that was going on at
that time was what I was reading in the papers.

Q Did you know anything further about this contact
by Mr. Rehm? Contacting any other government people, for
example?

A No, I did not.

Q He gives some fairly significant information in
here. He names, in your own memo on page 433, you quote
him as naming Southern Air Transport, Florida West,
Challenger International Cargo, Caribbean Cargo, and you
go on further to say:

"Colonel Rehm also felt a number of

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these airlines were doing things
that could be embarrassing to the
U.S. government."
Why didn't you contact anybody in the government,
if you felt he had said they were doing something?

A I had no reason to. I didn't want to get involved.
I'm not looking for involvement, and the one thing I have
done has got me involved with more than I want to be. I
got a humanitarian piece of information I turned in and
look at all the time I spent with you.

In any event, the short answer to your question is,
I did nothing.

Q I gather that Rehm knew Ambassador McCormack
personally?

A That's the impression I had, yes.

Q He refers to him in his letter of August 17, which
is pages 417 through 419, as "Dick ttcCormack."
A Yes.

Q Now in the same letter on page 418, he specifies,
with remarkeible accuracy, exactly what aircraft are being
used in Central America at that time by Secord. Of course,
he doesn't name him. He says, "I'm pzurtially aware of the

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current success and lack of same with respect to direct air
support drop missions to date."
This is August '86.

"I recognize the difficulties inherent in trying
to maintain and operate desert relics, such as Fairchild
C-123, C-7A/8A Caribou/Buffaloes," et cetera, which are the
aircraft that were being used at the time.

Did you inquire of him how he knew precisely what
aircraft were being used?
A No, I did not.

Q He says that this Connor Aircraft, the one he
worked for, is right next to Southern Air Transport.
Presumably, he's sitting there at Connor, looking down the
tarmac in Miami and watching —
A Could be.

Q — Secord and company taxiing in and out in
their Caribous and C-123s.

If you had asked him about that, he would have
told you?

A I don't know. I didn't. I had no reason to.
Basically, I had no interest in talking to the
guy. I was doing McCormack a favor. The guy C2une over, and.

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INKMD

he said, "Please talk to him." And then I talked to him.
That was it. I didn't want to get involved any more than I
had to.

Q What did you think of his proposal for what he
calls "Closely controlled DC-6 aircraft with a unique
delivery technique," and he goes into enormous detail on
exactly how they are going to do it, their altitude, their
drop methods, page after page after page?

A I read it. As far as I was concerned, it was
nothing new.

Q Is it a competent idea?

A Yes. It's a standard package.

Q Not entirely standard?

A No. I mean, it's a standard package for that kind
of activity. It's nothing new. Did it excite my
attention? Did it stretch my imagination? Did it teach me
any new skills or techniques? No. I read it.

Q I'm asking as a guy who served in Laos and
lectured on these techniques, whether this guy Rehm is a
knowledgeable guy with a sound idea , or whether he ' s some
kind of fly-by-night pilot looking for work.

A Perfectly sound, but there's nothing new.

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Q And why didn't you let anybody in government know
about this?

A I didn't have any interest. Didn't have any
desire, and as I told you, my basic rule is not to get
involved. I'm out. I did all my time in government, and
that's it. I'm finished.

Q So you referred him to Ollie North?

A I told him what I read in the newspapers, and
that that would be a good place for him to go.

Q Do you know if he went?

A I have no idea.

Q You never heard back from North?

A I told you, the only time I talked to North is
the one time I saw him in Tom Rehm's office.

Q So the answer is, no, you didn't.

A No, I didn't hear from North. Why would I?

Q And you never heard from Rehm?

A I think Rehm called me once or twice since then.
There may be another memo in there. Rehm called me in
July of '87.

Q That's page 414 you're referring to. Obviously,
the complexion of the covert operation in Nicaragua changed

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in the meantime.
A Yes.

Q And he called about something else; right?
A Right.

Q Did he ever tell you what, if anything, had
occurred with his Nicaragua support operation proposal?
A No.

^4R. MC KAY: Off the record.
(Discussion off the record.)
BY MR. HOLMES:
Q I'm looking at page 641 and also on page 640 and
642. This is your telephone log for RAI , and these three
pages each have some calls made on the 19th, 20th or 21st
of November '84. I'd like you to look at these billings
and tell me, if you can, what those calls related to and —
MR. MC KAY: Any call on the 19th —
MR. HOLMES: 19th, 20th and 21st.
THE WITNESS: I'm not sure I follow you. You're
asking rae to look at the calls here.
BY MR. HOLMES:
Q We're talking about the three days that you
were in Europe, speaking with Ghorbanifar.

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A Right. So these are the calls here.

Q Yes . There are a few on that page and a few
on each succeeding page. You're now looking at 64 0.

A These are calls — the way this is structured,
these are calls from my office to these locations.

Q Not necessarily. They would be billed to your
office, whether made from your office or made from a
remote place.

A Usually, we say that they're billed, and they're
not. So this looks to me like these were made from my
office to these locations.

I mean , I wasn ' t here .

Q Different carriers have different methods of
billing.

A Normally, my experience with this is to handle
this on a — I don't handle the telephone bills. I know
how that sounds, but that's the way it is. I don't handle
the telephone bills.

Q So you can't tell me what those numbers are?

A X have no idea.

Q You don't have any idea what those numbers are?

A No. These are calls to the U.K. Here's a call

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to France, a call to Kansas City,- Petersburg, Virginia.
I wasn't here, so even if i were here, I probably wouldn't
know what the calls are. I don't monitor every call made
by every person.

Q Well, what I'd like you to do is place yourself
back in time and tell me who would be the likely recipient
of a call from your office during that period of time in
those cities and country.

I realize it's not —
A None of these jump out at me. I have no way.
really don't know what to tell you.

Q If none of those, we can go to the next page and
see if we can find any clue as to what was going on.

A Well, there's one call here I recognize. Two
calls here. One is to New York to TW Oil, one is to
TW Oil in Holland. One is a call to — there's another call
~ no, it's the 27th. You said the 19th, 20th and 21st?
Q Yes.

A There's a call to TW Oil in Bermuda. It sounds
like all standard business calls, whatever was going on at
that particular time while I wasn't here.

Q You and the people in the office would be in

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touch with TW Oil on a daily basis?

A Right. But there's a call here to Germany.
I don't know. Probably have to look up the area code. I
don't even know the area code for Hamburg.

Q What hotel did you stay at in Hamburg?

A I told you the Four Seasons. The English
equivalent of Four Seasons. No, I can't help you with this.

Q I'm showing you page 904, same question.

MR. MC KAY: The earliest call here is 9/26 that
I see on this page.

THE WITNESS: That looks like 9/30. I think we've
got a disconnect.

BY MR. HOLMES:

Q I gather from your Rolodex, which starts at page
1609, that you have stayed in fairly close touch with the
House and Senate Intelligence Committees over the years.

A I think early on in the early days, I had some
calls, but I haven't stayed in touch with them recently,
but their cards were in the Rolodex.

Q When you say "early days," you mean early after
your retirement?

A Yes.

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Q But you didn't see fit to call them up about
Mr. Rehm?

A No.

Q Would it have been inappropriate for you to do
that, do you think?

A I told you, I tried to describe to you my mind
set. A guy came in. I talked to the man, told him what he
could, and that was it, as far as I was concerned, and it
was a closed chapter. There's no law that says a guy walks
in your office, you got ot report it to somebody.

Q Well, you knew that what he was proposing would
have been a violation of the Boland Amendment?

MR. MC KAY: I object. That calls for a legal
conclusion. There's no indication whatsoever he was thinking
about what the Boland Amendment said.

THE WITNESS: I wasn't involved in it. Why would
I worry eUsout the Boland Amendment?
BY MR. HOLMES:

Q Well, I'm not suggesting you're sitting in your
office chewing your fingernails eibout the Boland Amendment.
As a person who is discharged from the CIA and living in
the Washington area and cognizant of what's going on in

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covert operations around the world, you had to know the
Boland Amendment existed.

MR. MC KAY: Are you saying he is cognizant in
1986 of what was going on in covert operations around the
world? I don't think there's anything to justify that.

MR. HOLMES: Well, as a general statement, he
was giving lectures to the military.

THE WITNESS: I'm talking about very specific
kinds of things in terms of theory of guerrilla warfare.

Have you read my book?

MR. HOLMES: No, I haven't. I'm willing to.

THE WITNESS: It's a book on theory. It's a
theory of guerrilla warfare, counter insurgency, as seen by
my perspective .

BY MR. HOLMES:
Q And you're not disagreeing you didn't know of the
Bolsmd Amendment?

A I may have read something about the Boland
Amandment, but I wasn't worrying about it. It didn't impact
on anything I was doing.

Q You knew it existed?
A I knew it existed.

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Q And you knew when you read Rehm's piece, that if
that was implemented that would have been a circumvention
o the Boland Amendment?

A No, I don't think that that thought even came to
my mind.

Q All right If it had come to your mind, you
understood the Boland Amendment enough to know that that would
have violated it?

MR. MC KAY: I'm going to object to that and say
it's speculative and direct him not to answer.

He told you he didn't have a thought, so what
difference what might have cone to his mind, if he had
thought eibout it?

MR. HOLMES: I'm getting now to what he
understood the Boland Amendment to mean.

MR. MC KAY: He didn't do anything. He didn't
deal with this man. Are you saying he's got some obligation
to decide what you all have been spending months arguing
about what the Boland Amendment means?

MR. HOLMES: No, I'm getting into the facts of
what he knew.

MR. MC KAY; Well, he knew the Boland Amendment

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existed. He's told you that.

THE WITNESS,: The man caune in and talked to me.
I talked with him. I felt no compunction to do anything,
period.

MR. HOLMES: I heard that.
THE WITNESS: Bang, finished.
BY MR. HOLMES:
Q I want to know if, thinking about it now, in
retrospect, you understood the Boland Amendment at that time
to prohibit what he was suggesting.
A I don ' t know .

MR. MC KAY: Object on the grounds it calls for
a legal conclusion, and it's irrelevant.

THE WITNESS: I don't know that I did.
BY MR. HOLMES:
Q You say you don't know whether you did or not?
A Yes.

Q Who is Jeff Footner — F-o-o-t-n-e-r?
A Let's see if I can refresh my —
Q He's with R. G. Hobleman.

A He was a guy who was an account executive at
R. G. Hobleman, the freight forwarding company.

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Q How long did you do business with R. G. Hobleman?

A For a couple of years . I may have used them
for a while when I was doing food brokerage business through
TGS, when I was still trying to do something in the Bahamas.
I may have used them for a while then.

Q So, '79 and '80, that period, and then later
again?

A Yes, certainly '79 and '80, and then maybe at
some later period.

Q Are they still in business?

A I don ' t know .

Q What was the last you heard of them?

A It seems to me, a couple of years ago, but I
can't be more precise than that.

Q And how was it left? How was your relationship
left? Did you simply get no more business for him?

A It was simply left that we weren't doing that
boainess, and I had no need for the services.

Q What is Freedom Oil, Montgomery, Alabama?

A Freedom Oil is a company that has gone out of
business. It's a company that did land leases in Louisiana
and was located in Montgomgery, Alabama.

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Q Is Dennison Mines a principal in that business?

A No. They were doing work for Dennison Mines,

Q And is Andy Nolan a principal?

A Yes. Andrew Nolan is a principal. He was the
owner of that particular company, and he's a cousin of my
wife' s.

Q How do you know Paul Hewgill?

A I don't know that I know, that I do know him.

Q H-e-w-g-i-1-1?

A Everybody in there doesn't necessarily mean Z
know the person. Could be somebody else in the office had
put the individual cards in.

Q It says he's senior vice president of H.M.H.
Associates Limited, International Security Consultants, here
in D.C.

A That doesn't tell me anything.

Q Do you know Bill Heron or Art Kim?

A Oh, yes. Art Kim. I do know Art Kim.

[who has a security firm in the Washington

area.

Q
A

How eibout Bill Heron?

Bill Heron used to work for him. I don't know

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whether he still does or not.

Q Have any of these men ever worked for you?

A What do you mean, "worked for me"? When?

Q Since you retired.

A Kim has done some work for me in helping install
security systems.

Q Install security systems?

A Yes.

Q What kind of security systems?

A Controlled entry to office complexes.

Q I didn't know you did that kind of work.

A I told you I did design security systems.

Q I guess I didn't pick that up.
What kind of security systems?

A Because you asked me if I could design a security
system, and I think you jokingly said whether I designed
the security system in North's house, and I told you no.

Q You told me you did home renovations, did VIP
security.

A Right. And I think I told you also I did security
systems .

Q And how long have you done that?

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UN£LAS$[F{ED

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A I was doing that for a number of years. I don't
know when we first started. I just can't come up with
a date.

Q Has this ever been in connection with or in
cooperation with Albert Hakim?

A No, I haven't bought any equipment for him or
done anything like that.

Q Have you consulted with him eUaout security
systems?

A No.

Q Do you know Andy Messing — M-e-s-s-i-n-g?

A Yes.

Q How do you know him?

A I met him here in the Washington area. Like in
the days when I knew him, he was in the Conservative
Caucus .

Q Have you had any business dealings with him?

A No.

Q What business, if any, have you had with a
Mr. Raymond J. Okudzeto ~ 0-k-u-d-z-e-t-o?

A That sounds like a Nigerian name. Let me look at
that. That sounds like a Nigerian name.

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Q Page 1662.

A I don't recall. That has something to do with
some company in England. That has something to do with oil,
but I don't remember the details of it at this point in
time. It sounds like a Nigerian name.

Q That's the only time you had dealings with this
gentleman?

A Well, I don't even know that I had dealings.
Obviously, somebody in my office had, but that name rings
a bell, in the context of Nigeria.

Q Have we talked about John Singlaub before?

A I don't know. We talked about so many people,
at this point.

Q Do you know John Singlaub?

A Yes, I do know John Singlaub.

Q How do you know him?

A I first met him in Laos. That's the only place
I knew him from, and I knew him in Vietnam, and I forget.
I don't think I have any memory of dealing with Singlaub
after Vietnam.

Q Have you had any contact with him at all since

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then?

A Yes. A couple of times he came into my office to
discuss various things, and since this famous law case in
Miami broke, I called Singlaub in, let's see, June of '86,
about the case.

Q Prior to that, what various things have you
discussed?

A I think he came in an talked in general about what
was happening in Asia, my appreciation of the Middle East,
and so forth.

Q What was his reason to come and see you about that?

A Just general conversation.

Q Did he have any exhortations for you?

A No. No exhortations.

Q In your discussions with him in early 1986 , what
did that consist of?

A The sqme thing with everybody else I contacted in
June of 1986: "What do you know about this Miami lawsuit,
and why am I in it?"

Q And what did he say?

A He said he understand why he was in it, but he
didn't understand why I was in it.

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Q What did he say about why he was in it?

A World Anticoiranunist League fund raising, so forth
and so on. A very b^ief telephone conversation.

Q Did he give you any more details than just that?

A No.

Q Are you friends with the people at R. G. Hobleman?
I notice you've got five or six different R. G. Hcbleman
em-ployees listed out separately.

A No. I think at various and sundry times, their
people changes, and we had just different cards with different
people.

The only people that I can remember meeting is
Hobleman.

Q So these would have been cards for the use of
your office staff in making commercial connections back and
forth over the time you were there?

A Right.

Q Have you been in touch wit}
— since you retired?

A Yes.

Q You have both'
separately. You hav

and^^^^^^^HLn here

and you have spelled

424

/hich is one of a number of optional
spellings .

A Yes.

Q With the saune phone number. I gather that you
have had contact with him yourself?

A Yes. I told you I met him.

Q And what was the context of that?

A We covered this the other day.

Q You had personal contact with him, or are you
talking about Hakim?

A We covered all of that. Just to refresh your
memory, put out an English language training program for
him, so I had dealings with him at that time.

Q You haven't had dealings with him other than the
ones you talked a^ut the last time we were here?

A Right.

Q There's a Jim Fees in here.

have seen him several times

in social context.

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Q No business dealings?

A No.

MR. MC KAY: Off the record.
(Discussion off the record.)
BY MR. HOLMES:

Q I asked you. abou^^^^^^^Bbut I didn't ask you
if you had any business dealings with them since you retired,

A No, I didn.'t have any business dealings with them.

Q What is RPV?

A That's reconnaissance airplane type thing, little
drones. 1 think it's reconnaissance photo vehicle.

Q And what did you and Felix Rodriguez have in
conunon with RPVs in 1982, looking at page 1895?

For the record, I might note we are in the TGS
documents.

A This is a letter written by a fellow who was
associated with me at the time, Johnny Carter, to a company
in Panama that obviously was looking for RPVs, and this was
an attempt to open a dialogue. This probably was some
company that was recommended by Felix.

Q The Paneuna Comp2uiy?

A No. It looks like it's in Caracus. I think if

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you look at it, it shows it's Caracus.

Q What did FeJix Rodriguez have to do with it?
That's my question.

A I don't know. This was obviously a transaction
that one of the fellows, at that time, John Carter, handled
with Felix. And it looks like we were trying to market
an RPV. This is probably some company that Felix said,
these guys are interested in RPVs.

Q Were were you getting the RPVs to market?

A Let's see if it says in here. I don't recall. It
says about a brochure. Let me see if there is anything in
here. I don't see it. It just says, "I'm enclosing
brochures and flyers on the system."

I don ft know what company we were getting them
from.

Q Are there a number of RPV companies?

A Yes. It's a fairly conunon —

Q What is Project Long Look?

A For me, it looks like that's a description of
whoever 's brochure it was, they were describing this
system.

Q And it says they are being bought by any of the

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427

South American countries.

A Yes.

Q What does it do exactly? It flies around in
circles and —

A No, It can v6 used as a reconnaissance vehicle.
In other words, if you want to put it — it's like a drone.

Q I'm not getting the whole picture of what kind of
things you would use it for. Is it high altitude, low
altitude?

A No, this is essentially low altitude.

Q Elestronically radio-controlled?

A Essentially, ground control, so that you can
fly one of these reconnaissance vehicles and take photographs
of a particular area. You might use it for geological
surveys in inaccessible areas. That's its commercial
civilian utilization. It also, obviously, has a defense-
related utilization.

Q What are the ranges?

A They vary. I mean, the systems vary. You're
talking short ranges, 50-75 miles.

Q And you paid Felix Rodriguez for some travel in
connection with, I gather?

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A Right .

Q None of this was ever sold?

A No.

Q Did you ever discuss RFVs with anybody who was
intending to support the Nicaraguan opposition?

A When your lawyer contacted me about this
disclosure, we discussed a Kuwaiti project. I gather in
this financial document section, I see some references
to a Navy claim for $3-1/3 million, and it seems to be
in connection with work contracted to be done in Kuwait.

A That's correct.

Q Can you give me a thumbnail sketch of the Kuwaiti
project|| so we'll have that?

A I think that's a write-up in the file there.
The last project we did was to refurbish a
warehouse and build a new warehouse and an administrative
building. That's the proejct on which there's a claim for
funds in excess of $3 million.

Q Did your line of credit with the Capitol Bank
have anything to do with the Kuwaiti project?

A Yes.

Q And was the Kuwaiti project the purpose of the

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429

$1 million in documentary letters of credit for material
purchased?

A Yes.

Q So this was also construction materials?

A Right. Construction materials or prefabricated
warehousing components.

Q In your dealings with Mr. Singlaub, you had
occasion to deal with his company, GEOMILITECH?

A Not in my dealings with him. Separate from that,
i can't think of the lady's name, but if you show me the
file, I'll tell you the lady's name.

Q Barbara Studley?

A That's right. She came into our office with
Andy Messing and said she was interested in risk analysis
business. She was interested in the defense market in Latin
America, so forth, and we talked with her, Andy Messing and
her lawyer, whoever he was. I don't remember the man's
name. And then she gave us a brochure, or we got a
brochure subsequently, which mentioned Singlaub as being
one of the people in that company.

Q And the people that are described in their
literature are former Air Force and special operations

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types, for the most part; is that correct?

A I haven't looked at that for a long time, other than
Singlaub. If you let me look at it, maybe I can —

Q There's a Bruce Herbert, who is Intratheater
Air Lift to Support the Kuwaiti Forces; there's Ron Harold,
who is a former Israeli Air Force; there's Singlaub himself,
who is former Joint Unconventional Warfare Task Group.

A Of the names you read there, the only neune I know
of is Singlaub.

Q Did you or any of your companies associated with
you ever do business with GEOMILITECH?
A No.

Q Back in November of '84, according to page 1903,
in the disclosure you wrote another one of your self-
protective memorztnda for the record relating to a contact
with the GEOMILITECH consultants. I'll just read it in the
record; since it's very short.

"Mr. Rafael Garcia-Toledo visited the TGS
International office on 16 November. He
was acccoipanied by Mr. Munez. The people
in GEOMILITECH that were known to us were
discussed, i.e., Barbara Studley,

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Major General Keegan, Major General
Singlaub and John Carbugh. This led
to a discussion of the arms market
and general trends in this arena."
I'd like to know what discussion you had with
those folks on that subject.

MR. MC KAY: I'm going to object to the question.
I don't know what you mean by "self-protective memoranda."
He writes memoranda for the record of visits to make a
record.

MR. HOLMES: I don't mean it in a derogatory
sense. I write self-protective menoranda to the file too.
I think it's a good practice. I'm just asking him to
expand on this.

MR. MC KAY: All right.

THE WITNESS: When you read those names, you
didn't read Keegan 's name. Is he in the original list?
MR. HOLMES: Well, Keegan is on your list?
THE WITNESS: Is he in the list? You read a
couple of names, and I don't remember you reading Keegan.

MR. HOLMES: No, I didn't read it. It's not
in there.

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THE WITNESS: I just want to make sure we didn't
cross there, because I do know Keegan.

Rafael Garcia-Toledo has been active in the
Latin American market for a long period of time, essentially,
in the housing area. I think he was looking, in terms of
expanding his business into what he thought was a lucrative
market in Latin America for arms. He ceune to us to talk
about GEOMILITECH, raised these names with us, and we gave
him our evaluation of what we knew of these people.

Q Was he contemplating some kind of joint venture?

A I don't know. He had met these people recently
and wanted to know who they were, and I don't know what
the interrelationship was, you know, what they were going to
do, and we talked about the trends in Latin America, who
had money, who didn't have money, who was likely to have
money in the future, and so forth, and I think my advice
to him was to say out of the arms market.

Q Were you able to tell him from any source you
now recall what the financial picture was for arms in
Central America?

A No. But there are a lot of overt publications
that are around, and we get those publications, so we keep

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433

abreast of the trends and developments in this area.

Q And there ' s another cryptic sentence here on page
1904, which is from GEOMILITECH documents.
A Is it a brochure or something?

Q I don't know if you call it a brochure, but it's
some stuff that's got their letterhead at the bottom. It
says:

"GMT corporate strategy rests upon
the jJaility for a strong national
defense, perpetuates a healthy
economy and, therefore, the potential
for world peace."
Have you ever discussed this belief with anybody
from GEOMILITECH?
A No.

Q As a person who has spent his career in government
operations that have some connection with national defense,
what is your opinion about that statement?

MR. MC KAY: I'm going to object on the basis,
it's irrelevant, but you can answer the question, if you
can.

THE WITNESS: I don't think I really focused on

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(6:00 p.m.)
it. I didn't pay any attention to it, and at this point in
today's session, I'.n getting tired, and you know, we're
running down. I don't have any views on that.
BY MR. HOLMES:

Q Now I gather there was a period of time since
your retirement — or maybe it's a longer period of time —
in which you solicited information in preparation for
bids relating to weapons systems from the U.S. government?

A Related? That is, the support aspect of weapons?

Q Right.

A A lot of times what you see is in the "Commerce
Daily Business," a two-or- three- line thing saying, if you're
interested — you don't even know from the description
whether you're interested or what the system is. You sort
of have to go on a few key words.

So we did write a number of proposals to see if
it was something we wanted to bid on.

Q Some of these have included missile systems,
haven't they?

A I'd have to look at that array of paper there .

Q I'm looking at page 1916, where you're asking
through Bill Howe, your vice president, for information

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UNCUSSIHED

435

pertaining to technical services in support of a ground
launched CRUISE missile project. And there's another one
relating to HAWK missiles.

A We would be looking at that in terms of the
storage aspect of spare parts and backup for these particular
systems.

Q And did you ever do any contracts?

A No.

Q You were prepared to do contracts, if you had any?

A We were prepared to look at them to see if that
was within our capability.

Q Does Harper Robinson & Company have any ties with
R. G. Hobleman & Company?

A No.

Q Does it have any crossover in employees or
offices or facilities at all that you are aware of?

A No. No. Harper Robinson was a designated
freight coordinator for the Kuwaiti government, and that's
why we dealt with them on the Kuwait project. An
idependent company.

Q Looking at document 1935, in which you are
responding to a Jorge Poveda — P-o-v-e-d-a — in Costa

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436

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436

Rica and say at the bottom:

"Re lobbying for a Peronista group, would
need more details before being able to
express serious interest. Some Peronista
factions clearly all right. Some not."
Excuse me. That's Jcimie who said that.
A I was going to say that sounds like a Jamie
cable, because he has, on several occasions, looked at
representing foreign governments in the United States.
I don't subscribe to doing that, and therefore, if he
had ever got a contract to do that, he would have gone off
on his own.

Q Do you know what he means by this — what
Peronists he thinks are all right and which ones he doesn't?
A I haven't discussed that with him.
Q Have you ever done any business with this
Jorge' Poveda?

A No, I have not.

Q When I say "you," I naturally mean you and the
ccnipany .

A No, we have not done any business with them.
I think that was a contact of Jamie's. Jamie was exploring

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437

something with them, and that was it. Nothing came of it,
as far -as I know.

Q Have you discussed with anyone the possibility
of lobbying on behalf of greater foreign aid for a Central
American country?

A No. I think Jamie was looking at one time as to
represent somebody in Guatemala or somebody, and he was
trying to put a group together and had some discussions. I
never discouraged him from doing it, but the understanding
was, if he ever put a package together, that he was off
on his own.

Q This is dated February 1983, and he states in the
letter cable to Francisco Bianchi — B-i-a-n-c-h-i:
"Must stress that good lobbying efforts
here, in all probability, would add
millions of dollars to Guatemala's
aid package and significantly increase
opportunities to export to U.S."
Does that sound like an offer to lobby for
Guatemala?

A I think he probably was interested in looking at
that. I recall he talked with two or three people to see

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if they could put something together.

Q Do you knovv if Donald Jameson has ever registered
as a foreign agent or agent of a foreign government?

A I don't think he's ever represented a foreign
government. I think he tried on several occasions to put
a package together and has not been successful in doing so.

Q Hassan Managa is an employee of TGS, isn't he?

A He was an associate. His father is a shareholder
in TGS . He did some architectural work for us on the
Kuwait project.

Q I'm looking at document 1021. It's 2011. He's
talking about a barter deal with Iran.

A Yes.

Q And he says, "Say hello to Ali for me."
Who is Ali?

A I have no idea.

Q Would it help you to look at the thing? It's
dated September of '85, if you can narrow down the "All's."

A No, I can't.

Q During the 1985- '86 period did your company, TGS,
have something to do with looking for specialized security-
type people to work in Saudi Arabia?

y:1bLnOil?i «

439

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A Specialized security people? Better let me take
a look at that.

Q 2033.

A Let me take a look at that.

Q Specialized U.S. and British workers for
eiTiployroent in Saudi Arabia.

In other words, workers to be security type
people .

Are those construction people, or what?

A Just let me plow through this , because that
doesn't tell me anything. This was a transaction handled
by Mr. Gillespie. 1 don't see anything here that would help
me answer that question. It doesn't ring any bells with
me. I would say they odds are that some sort of construction
work.

Q Why would you look for British people to do
construction work?

A Depending on what the items were. In some cases,
the British engineers are cheaper than American engineers.

Q I'm looking now at a foldeJ[^ marked Stanford
Technology. It starts on page 2081, and at 2084, there's a
letter from yourself to Hakim relating to helicopter

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sales in South Korea. These are the Hughes helicopters we
talked about before?

A Yes.

Q What was Hakim's part in this transaction? What
was he bringing to it?

A Basically, the entry into the Korean market. He
had neen doing some work, I think, by that time, in Korea.

Q Who were his contacts there?

A I don't know. I know he had done some work for
the Korean Power Company or Electric Power Company and had
a lot of contacts with the Korean business community. If
I recall that correctly, we were recommending to him to look
at the Korean Airlines import of helicopters or assembly of
helicopters.

Q These are military helicopters; right?

A No.

Q Model 500MD Defender Scout sounds like a military
helicopter.

A No. I think that was an assembly. But I would
have to look at the catalog. I think this was an assembly
project of a fairly light helicopter. I think it's a
commercial helicopter. Otherwise, I don't know why Korean

n,iju-\v\

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Airlines would be putting them together.

Q I'd like you to look at page 2085. This is an
early 1983 termination of the Trinidad and Tobago project
and the Honduras project.

I want you to tell me what the Honduras project
was at that point.

A It looks like someone in Honduras had some sort of
a radar program that we had been asked to look at or we
had proposed.

I don't recall the details of it. Looking at these
two numbers, they both look to be in the same category, so
I know that the Trinidad-Tobago one was a radar, so I
assume this is a radar.

Q You don't recall anything more about the Honduras
project other than radar?

A No, I don't.

Q Has it the sazae kind of shore type or shore coast
radar as Trinidad and Tobago?

A No, I really can't recall. Obviously, it says
here, specifically, Hestinghouse is coming up with a project,
so they make a wide array of stuff, so I don't know what that
could be. Right here it says in here there's a description i

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of this.

Q 2086?

A Air Transport Long Range Search Radar.

Q What is that?

A This is possibly some sort of a radar system that
can be put into a van and can be moved from one location to
another to give the radar facility mobility against whatever
target it's looking at, not tied to a fixed base.

Q What is the application for a system like that?

A Probably coastal and air defense.

Q Against what?

A Airplanes, ships. You know, whatever you're
targeting against.

Q And what was Honduras concerned eibout at that
time?

A That I can't tell you. I don't have any —

Q Other than Dick Secord?

A In 1983? You know, there was a time — I can't
clarify that any further than that. I'm just trying to
think what was going on in ' 83 .

Q Was this intended for use in Honduras?

A That's certainly the impression I get from that.

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I don't remember that transaction.

Q And you don't recall discussing this with Neidhart
or anybody else?

A No.

Q Is it possible that that system was meant to be
purchased by Honduras and turned over to somebody else like
the contras for use?

MR. MC KAY: I object. I think that calls for
speculation.

THE WITNESS: You know, in '83, I have no concept
of that.

BY MR. HOLMES:
Q I gather, from page 2091, that you and Mr. Hakim,
as early as August of 1982, you and TGS were engaged in
discussions about support systems for a number of military
weapons in Egypt, including armored vehicles, HAWK missiles,
F-16 Falcons and P-4 Phantoms; is that accurate?

A Yes, I think we mentioned before, we had given
tiMB a series of packages relative to logistics systems
for various tactical components.

MR. MC KAY: Explain for the record what you
proposing to provide.

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444

THE WITNESS: Part of the storage equipment which
would enhance the retrieval and issuance of spare parts for
systems .

BY MR. HOLMES:

Q Have you ever heard of a company called Four Ways?

A No. I think you asked me this before. I'm not
familiar with a company. Four Ways, but I think you asked me
this before. It's come up somewhere here recently.

Q It might have been in the subpoena.

Are you fcuniliar with any company by any name
that manufactures difficult-t<3- locate, out-of-production
military spare parts?

A No.

Q You have never done business with any company like
that?

A That manufactures difficult spare parts?

Q Right. Spare parts that are either out of
production or a particular need for one reason or another ,

A No, I don't have any recollection of being in
touch with that kind of a company.

Q Have you ever discussed that kind of company
with Hakim or Secord or Clines?

PPBHED

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A No, not that I have any memory of.
Q Various of these proposals that you put together
I notice are a sizable amount of money, are they not?

A Yes. Some of the spare part systems to handle
that kind of item are expensive.

Q So it would be fair to say that if you and Hakim
had been successful in any of these, that it would have
made an enormous difference to your company's financial
well-being?

A Yes.

Q Like this HAWK parts logistic support system is
$5 million and some of these others are larger?

A Right.

Q Has TGS engaged in the sale of medical supplies
in the Middle East?

A We are trying to get involved in the sale of
medical supplies in the Middle East.

Q When did this effort begin at TGS?

A Probaibly in a serious way, 1 guess maybe about
a year ago.

Q In other words, December of '86?

A Well, it seems to me about a year ago we were

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446

talking. Prior to that, we had some correspondence with
Kuwait and so forth on individual medical items, but I
think in a serious vein in Kuwait about a year ago.

Q And the source of these medical supplies would
have been where?

A U.S. firms.

Q Strictly U.S.?

A Yes.

Q Not European?

A No, we have not looked in the European market.

Q Have you discussed supply of medical supplies to
any Middle Eastern country with Hakim?

A No.

Q Secord?

A No, I have no recollection of that.

Q Has TGS, through its board of directors, discussed
the possibility of providing or purchasing, for any purpose,
jet aircraft?

A We have talked about 747s. I think I covered
this with you the other day, about 747s for China. 747s,

and I think, 707s. You're probeibly reading from the

i
corporate minutes there.

:i^S!flEO

447

Q I'm reading this from document 2962. But the
reference is to a Fernando Povone.

What role did he have in this transaction?

A He is an Italian, and he was representing the
Italian company that was interested in putting together a
transportation deal with China.

You remember I explained to you that they were
looking at various configurations of airplanes: total
freight, half freight, half passenger, all passenger, which
made it very difficult to put together what they wanted.

Q What is the market price for a 747 aircraft?

A It depends. I can't give you a cold answer like
that.

Q Sure, I understand that. Give me a range.

A I mean, there are so many variables, and you
can't back me into an answer, because you want an answer.

Q I don't want a specific answer. I want to know
what kind of money we're talking about. Would it be a
couple of million?

A You're talking about a substantial amount of
money. It depends on how many hours are on the air frame,
how many hours on each engine, what spare parts package

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goes with it, and so forth, and each one has to be looked
at in the context of the time.

Q Let's get into it a little bit further. You
had potential buyers in China; correct?

A Mr. Povone had potential buyers in China.

Q And they had at least some, idea of their needs?

A Right.

Q And they communicated those needs to you?

A No. To Mr . Povone.

Q And at some point in time, you and Mr. Povone
attached some specific group of aircraft to their needs?

A Well, we were looking at and negotiating at that
time, I think, with TWA.

Q And negotiations with TWA were for particular
needs?

A Right. For a specific type of aircraft and
configuration. But the Chinese couldn't define exactly
what they wanted; TWA had no schedule for releasing the
aircraft, and eventually, the thing just disappeared.

Q Now I want to know what the price ranges were of
the particular aircraft that^you and TWA were discussing.

A I don't recall. If it's in there, let me read

4^£«:i «A(#'lJr5i tS»t«*

449

the thing.

Q It's not in here.

A I really don't recall. It's that complicated a
kind of transaction, you just can't come out with a number.

Q Did you and TGS discuss the purchase of any other
jet aircraft?

A In what time frame?

Q Any time frame?

A I think jet aircraft — no, I don't recall any
jet aircraft.

Q Does that mean that you recall nonjet aircraft?

A We talked the other day about the Buffalo-
DeHaviland's airplane. That's not a jet airplane. That's
a reciprocal engine.

Q Have you discussed with Hakim the proposal
purchase of aircraft at any time?

A I have no memory of talking to Hakim, other than
what we talked about when we talked about helicopter spare
parts, and so forth, and no other aircraft that I can recall

Q In the 1985 time frama, was TGS interested in
becoming a food broker for Iran?

A Well, we looked at that proposal that Managa had

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450

raised. You showed me some correspondence, we were talking
about before.

There was a proposal to sell food products to
Iran, but we found it couldn't be done.

Q And these were food products that were going to
be brokered through the Bahamas?

A Right.

Q Tell me how that was going to work in a business
sense.

A Well, there's a lot of food imported from the
United States into the Bahamas.

The question was, could you put a label on it, so
that you had American food products but not showing that it
came from the United States, and the answer is, no, you
can't, or could you put a Bahamian label on it? You can't?

Q And then transship it to Iran?

A Ship it to Iran. There's no way you can do that.

Q You can buyers in Iran for the food, if it was
possible?

A The Iranians had contacted Hassan Managa and said
they were interested in large purchases of food, U.S. type
products, but not U.S. -labeled. So the question is, can

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451

ONEMSSm

45i

you relabel? Is there a way to do that? And the short
answer to it is no.

Q Which I take it, took a while to figure out?

A Right.

Q During what period of time was that opportunity
being discussed?

I'm looking at 2980, which is your board of
directors meeting for 20 May '85.

A That sounds right. And you've got some other
traffic there, which was a telex exchange between Hassan
Managa and somebody in Iran.

Q Did TGS explore any alternative routeeof supplying
food to Iran?

A No.

Q And have they ever supplied food to Iran?

A No.

Q Looking at 2980 still, I would like you to tell
me, in paragraph 4, what K-4 means, and what — well, just
tail me what K-4 means first.

A Well, K-4 is a warehouse complex in Kuwait.

Q And the C-130, DC-9 warehouse is another complex?

A Another project; yes.

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452

Q Is it in Kuwait?
A Yes.

Q Has TGS ever done any business with Libya at all?
A No.

Q Has it ever done any business in C-130 parts or
maintenance?

A No. This is a warehouse for spare parts which
were already there in Kuwait.

Q Kuwait was supplying the spare parts?
A Kuwait had the spare parts already. It was a
matter of creating a warehouse, so they could recover their
parts.

MR. HOLMES: Any questions?

MR. MONSKY: Have you covered Mr. Zucker?

MR. HOLMES: No.

EXAMINATION
BY MR. MONSKY:
Q Have you heard of a Willard Zucker?
A Yes, I have heard of Willard Zucker.
Q What do you know about him?
A Basically, that he is a tax man, lives in
Geneva, Switzerland, and has been a longtime associate

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"NMS/WD

453

of Mr. Hakim.

Q Have you ever met him?

A Yes, I met him once and possibly twice.

Q Could you tell me when that was?

A I met him once in the United States, but I can't
remember the year. It was probably sometime in the '80s,
but I don't know what year it was.

Q And what was the context?

A The context is, I was meeting Hakim and Hakim
was finishing a meeting with Mr. Zucker, and Mr. Zucker
was going to the airport, and I was introduced to him. He
took off, and that was about the extent of it.

Q And where was the meeting?

A I don't recall. I think it was in the hotel
somewhere, in a downtown hotel, but I don't have any
recollection of that, except I met him. I was introduced
to him, and that was it.

Q What was the nature of the transaction that you
were conducting with Mr. Hakim?

A I think it was just a periodic meeting with
him that I was going to. I donit want to go back, you
know, this late in the day. I'm tired, and I have been at

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454

now for a while. I had a series of discussions with
Mr. Hakim. I met with him periodically. I can't be any
more precise than that to you.

Q You said two meetings?

A I met Mr. Zucker once just to say hello and talk
to him in the Geneva airport when I was transiting Geneva
airport with Mr. Hakim on a trip.

MR. MONSKY: Off the record.
(Discussion off the record.)
MK. MONSKY: Let's go back on.
BY MR. MONSKY:

Q Can you tell me what that trip involved?

A I think Mr. Hakim and I were on a trip to —
either coming back from Egypt or going to Egypt.

Q And the purpose of the business in Egypt?

A General marketing, and we had a conversation with
— I think it was the wife of the deceased Shah. She was
then in Egypt.

Q And what was the nature of the conversation with
the Shah's wife?

A General conversation about conditions, politics,
so forth, what she was planning to do.

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UNMSSIFIf!

455

Q No specific reason for the visit?

A No.

Q Who knew the Shah's wife, you or Mr. Hakim?

A Mr. Hakim.

Q Was there any other business purpose for the trip
to Egypt?

A No. Just the overall logistics problems, problem
solving and meeting with the Shah's wife.

Q Problem solving for what?

A Well, there were some proposals we put in at
various times for modular storage systems to support various
technical systems.

Q When was the earliest time that you heard Zucker's
name? Does it go back to the '70s?

A I don't know. The earliest time I ever heard
Zucker's name probably goes back to the '80s after I retired
in 1979. I think I started in business — let's see —
did some work for Hakim, and it was about that time. We
can look in here when I did work for HeUcim, and it was after
the start of the Iran-Iraq War, which is in September '80,
so it was after 1980.

Q Did Mr. Zucker's name ever come up in the context I

456

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456

of consulting work with EATSCO?

A Not that I know of .

Q Have you heard of a company called lOS?

A Is this the famous Bernie Kornfield, the investment
company going back a number of years?

Q Yes.

A Yes, I have heard of it.

Q Do you know any of the individuals who were
involved in that company?

A No. But I heard somewhere — and this is not the
first time these questions have come up, so I heard somewhere
in this panoply of questions that Zucker was employed by
Kornfeld and Zucker is a tax expert, allegedly.

Q Do you know that there was an assistant to
von Marbod, a General Fish?

A Do I know him? I have heard of the name, but I
don't ever recall meeting him.

Q Do you know of a company called Coastal Caribbean
Oil Company?

A Yes.

Q What can you tell me about Coastal Caribbean?

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457

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457

A I already discussed that. That was the company
that I did some work for, the Bernstein Brothers, on offshore
Florida leases, that Coastal Caribbean was involved in.

Q Has Mr. Zucker's name ever come up in the context
of Coastal Caribbean?

A Not that I'm aware of.

Q Do you know an Edmund Safra — S-a-f-r-a?

A No, that's not a name that rings a bell.

Q In international banking?

A No, that doesn't tell me anything. That's not a
name that I know.

Q Have you had any contact with any other people
associated with Zucker or know Zucker?

A You have to phrase that some other way. I'm not
sure follow you, what you mean by that.

Q For example, have you been introduced to people
who are friends or business associates of Mr. Zucker?

Q No, I don't recall meeting anybody, you know,
that has been portrayed as a business friend of his. All
I can recall is having met the man twice.

Q Have you ever heard of an oil company called
PROSOL — P-R-0-S-O-L?

458

A No, never heard of it.

Q What about a Mr. Al Bagen, who trades in Chemicals?
A No. I don't know anything adaout him. That's a
fairly common name. Where is he located?
Q Florida.

A No, I would say, no, I have not heard of him.
Q Or Canada?
A No.

MR. MOSKY: Can we go off the record one second?
(Discussion off the record.)
MR. MONSKY: Back on the record.
BY MR. MONSKY:
Q Do you know of two lawyers in Californa named Jones
and Barnett?

A No, those names don't mean anything to me.
Q Were you ever aware of a fact that General Secord
bought some pocket computers from Ed Wilson?

A No, I'm not aware of any pocket computers or any
computers ' transaction between Ed Wilson and General
Secord. I never recall anybody discussing computer
transactions.

MR. MONSKY: Off the record one more time.

459

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459

(Discussion off the record.)

MR. HOLMES: I Still have a few more.

EXAMINATION
BY MR. HOLMES:
Q Following on the computer question, did you ever
discuss with Hakim the sale by Hakim of computer systems
or computer support systems in the Middle East?

A I don't ever recall that coming up. I don't have
any memory of computers coming up.

Q Turning to Coastal Caribbean Oil Company, you
didn't ncime it at the time we went through it the first
time. I need to know a little more about that.

Who were the principals in Coastal Caribbean?
A I have forgotten the principals in it, but the
Bernstein Brothers had a large equity position in Coastal
Caribbean stock. It's a stock that's traded on several
over-the-counter exchanges. Boston, Philadelphia, Seattle
and so forth.

Q Were there other principals besides the Bernsteins?
A Yes. I'm saying he had a large — I told you I'm
getting tired. It's late in the day. It's a company that
issues a standard annual report once a year, and it's got

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460

a normal board of directors and has an annual meeting. I
forget the guy's name. The guy has been president of it
for a long time. I just can't think of his name at the
moment.

Q Have you or anybody associated with your companies
ever invested in Coastal Caribbean?

A Yes. I own a few shares in Coastal Caribbean.

Q And when did you purchase those shares?

A I don't know. I guess that at the time I started
working, doing some work for Mr. Bernstein.

Q Approximately when?

A I told you I remember that happened shortly after
I retired. It could have been '79, could have been '80.

Q Do you know anybody else who has shares in Coastal
Caribbean?

A The only other person I know of who has shares in
it and monitors it fairly closely is Felix Rodriguez.

Q And how do you know of his interest in it?

A Because he discussed it with me. Essentially,
I met Bernstein through Felix, and I know that he has some
shares in it or had sane shares in it and is monitoring
developments in the company very closely.

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461

Q Felix Rodriguez?
A Yes.

Q Do you know what the approximate value of those
shares are?

A No, I don't.

Q Is it a substantial block of shares?
A No. I don't know that. I really don't know.
MR. HOLMES: Let me check off some things.
MR. MONSKY: May I go to Coastal Caribbean?
MR. HOLMES: Of course.

EXAMINATION
BY MR. MONSKY:
Q Did you know Richard Secord owned stock in
Coastal Caribbean?

A No, I don't think I ever heard him discuss Coastal.
Q He acquired his stock about the same time you
acquired yours.

Was there something special about Coastal
Caribbean that led you to acquire your shares?

A No. It was a situation that this individual,
Maury Bernstein, was very enthusiastic about, and he ' s a
fellow who made an awful lot of money in the stock market, and

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he got me interested in it. I did some work for him on the
thing, in terms o£ leases off of Florida, and I bought shares
in it.

Q Do you know if he knows Richard Secord?

A I don't think he does. That's an opinion. I don't
think he does .

Q Have you met Mr. Dill or Mr. Pearman —
P-e-a-r-m-a-n?

A No, I have not. I'm not familiar with those names.
EXAMINATION
BY MR. HOLMES:

Q Do I understand that you purchased shares in
Coastal Caribbean but have never sold shares?

A I have sold and I have purchased.

Q In what order?

A Well, I would have had to buy them to be able
to sell them, and so I bought some and then there have been
stock options at various times. I purchased the stock
options and sold, and so forth. I bought some shares.

Q What I'm getting at is, have you traded them on
a buy-sell, buy-sell basis or just been one purchase and
then a partial sale?

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463

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463

jj A Basically, I have held them for a substantial
;' period of time. You're asking was I turning in the stock
or something on a speculative basis, the answer is no.

Q You purchased and then you sold some?

A Right.

Q And then did you purchase more later after the
first sale?

A At different times I had purchased and sole. As
the stock has fluctuated, as its problems have changed.

Q And you have monitored those changes yourself, I
gather?

A. Yes.

Q But you never discussed those changes with
Secord?

A I don't ever recall discussing those chemges with
Secord.

Q You never discussed the company at all with
Secord?

A Not that I can think of. I don't recall discussing
it with him.

Q And other than Rodriguez, you don't know of

464

anybody else who owns stock other than Bernstein?

A Bernstein. I know other people. I can't think of
the guy's name. There's a fellow in Philadelphia that's
accumulated a lot of stock. He's an investor. I can't think
of his name. I can't dredge it out of my memory right now.

Q have you ever heard of a man named Sam Bamieh —
B-a-m-i-e-h, a Saudi Arabian-American businessman?

A Oh, wait a minute. Is this the fellow who was
written in "Regardie' s" magazine recently?

Q I don't know whether he has been, but it makes
sense. He lives here in the D.C. area.

A There was an article that appeared in some
magazine about a guy who's name is very similar to that.
I don't know him personally.

Q Have you done any business with any company of
his?

A No, I have not.

Q Do you know of a cranpany named IDG, for Industrial
Development Group?

A No, I'm not fauniliar with that.

Q Have you ever heard of a company known as ADG, for
Arab Development Group?

UNe^StFlEO

465

A No, I have not.

Q Do you know of a company named Argo Systems?

A Argo Systems? No.

Q They dealt, at one time, in laser sights.

A No, I'm not.

Q Have you ever discussed any laser sight business
opportunities with Hakim or Secord?

A I don't have any memory of laser sights ever coming
up in any discussion.

Q Have you done any business discussions about laser
sights with any person?

A Not that I know of, no. I don't recall any laser
sights .

Q Do you know of a company n2uned Century Arms?

A Century Arms?

Q Based in Canada.

A No , I don ' t .

Q Have you ever met an individual named Mandy
Higginsberg, also known as Weisenstein?

A No, I;m not familiar with that n2une.

Q Do you know of a company named Trans World Arms?

A No, I'm not fauniliar with them.

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466

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465-A

Q Have you ever discussed a machine gun manufacturing
business opportunity with any person over the years in the
last several years?

A I don't know that I — a machine gun?

MR. MC KAY: Machine gune manufacturing.
THE WITNESS: I talked with a fellow a couple of
years ago from a company called Tround -- T-r-o-u-n-d --
that makes a cartridge that is shot into the face of
rock formations for mining for drilling, but this fellow has
been developing a gun called the Tround gun, and it's like
a Catling gun. I talked with him periodically, and he called
me up about a year ago. He was involved here in a show
in the Washington area. He asked me to come down to the
show where he was participating here in some defense thing.
I didn't get a chance to go to it.

Q What are the applications of this Tround gun?

A I don't know. It throws out a round which has
a lot of little needles in it. You might be able to use it
in SDI or something like that.

Q Could you explain that to me?

A Well, you throw out a big field of fire, and you're
blanketing the sky with metal, and if metal has any impact

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on penetrating anything that's flying through that.

Q It's not designed as an antipersonnel weapon
at all? It's an anti-electronic measures weapon?

A I would say it could be used against personnel.
He had, at one time, developed a hand gun many years ago
on this particular principle and developed some sort of
rifle at this point in time looking at it for a Catling
gun type of arrangement.

Q I take it you never had any business involvement
with this?

A No. I went up and looked at his plant, looked
at what he was doing in the drilling area. I never did any
business. I never bought anything from him, so forth. I did
look at it.

Q Have you ever had any business — and of course,
I'm always including the companies — with the Saudi Arabia
National Guard?

A No, I have never worked for the Saudi Arabia
National Guard.

Q Since you retired, have you had any business with
any shipping company other than the ones that you have
already mentioned?

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468

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467

A No. I can't recall any.
Q Do you know a man named Ed DeGaray?
A No, that name doesn't tell me anything.
Q Does Corporate Air Services mean anything to you?
A No. I think that was one that was on here.
Q Yes. Have you or any company that's on the list
that we made this morning or that is one of the ones you
responded on behalf of, had any deposit in any bank account
outside of the United States, other than the construction-
related bank account in Kuwait?

MR. MC KAY: I don't understand which company
you're asking him to respond to. We had four companies
that were subpoenaed. What else are you asking him to
respond to?

MR. HOLMES: I made a list of companies this
morning, the ones he was associated with:

API, RIT, SSI, Triangle Associates, STC, EATSCO,
Treuis-World and Bernstein Brothers.

THE WITNESS: What's your question again?
MR. HOLMES: That's an inappropriate list,
because I included Trans-World Oil and STC.

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\imm

BY MR. HOLMES:

Q Have you or any company that you were a director
of, officer of or controlling employee of, ever had a
deposit in a bank account outside of the United States,
other than in Kuwait?

A I don't consider myself to be those categories
you used to apply to TGS and RAI, and we have no accounts ;
other than the Kuwait bank account that we had in a foreign
bank account.

Q You lost me when you qualified it at the beginning.

A Well, I have only been an officer or director,
so forth, whatever the other items were that you mentioned,
for the company TGS International and RAI. Those companies.
The only foreign bank account we had was an accommodation
account in Kuwait, where we had to pay for local materials.

Q Let me ask the question in a slightly different
way to get a slightly different situation.

Have you, through any mechanism, whether it's
by ownership of shares in a corporation or control of the
corporation or through a lawyer who controls the corporation!
or any other agency or any other method at all, had control ;
of any funds outside the United States, other than the

470

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Kuwait bank account?

A No, I haven't No corporate activity that I know
of.

Q We're not talking strictly corporate activity.
I want to know if you, Theodore Shackley, through any method,
corporate or noncorporate, have had control of a foreign
bank accovint, whether it's in a bank or fiduciary or
depository.

A I'm not sure what you're — I've tried to answer
the question. I told I don't through corporations. What
else are you trying to get at? I told you the only
companies I have been an officer or shareholder in have been
TGS and RAI . I'm not following you. You've lost me
somehow with the other part of your question.

Q Mr. Shackley, I'm sure you're aware, through your
experience in the CIA, that there are a number of ways of
controlling funds without having your name on the bank
account or without have specific direct corporate control
of a bank account.

Do you agree so far?

A Yes. But I told you, I don't have any —

Q For exeunple, a person can have a corporation

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created in the name of ABC in Panama and then instruct his
Paneunanian lawyer to have that corporation open an account
in a bank in some other country, and then that corporation
can control the money at the direction of the person who
originally opened the account, without having his name
associated with it.

A Haven't I answered that? I told you I don't have
any or haven't had any corporate-related accounts except the
Kuwait account.

Q I want your answer on the ultimate question of
whether you, Mr. Shackely, through any mechanism at all, have
had control —

A Are you talking about me, personally, as an
individual or talking about corporate structure?

Q Either one. Personal or in a corporate structure
or through a partnership, through an anonymous society or
any other mechanism, have you had the eUjility to direct the
payment of funds from any foreign account at any time since
you retired?

A In a corporate activity, none whatsoever. At one
point I had a personal account in Bermuda, where I had a CD
in a Bermuda bank.

Q When was that?

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A That was probably about 1980.

Q And the amount of the CD?

A I don't remember. It was probably about $15,000,
maybe $20,000.

Q And the source of the funds?

A Those were funds that I earned in lecturing and
that Italian war game that I discussed with you.

Q So they had never been brought ashore from the
Italian payment, paid into Bermuda?

A No, I was paid by Mr. Ledeen. I opened an account
in Bermuda. I had that account for a short period of time,
because of the difference in interest rate. I subsequently
closed that account, brought the money to the United States,
and that's it. It's on my income tax, and so forth.

Q The entire cunount was paid you by Ledeen?

A Yes.

Q And it was in exchange for your services in the
Italan war games?

A Right .

Q So lecturing was as a component of the war games?

A Right .

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Q And was approximately $15,000 or $20,000?
A I think that's what the account was; right.

Q When did you bring it ashore?

A I don't know. Normally, I think I did that
through a bank transfer or through a check.

Q When it was brought into the United States, it
was brought into the United States as a credit, as opposed
to a loan?

A Hes. I mean, it came into my account. It wasn't
a loan from me to me, if that's what you're saying,

Q I'm not saying that.

A No, I mean, if that's what you're asking, was it
a loan from myself to myself, the answer is no. It just
came in, and it was a deposit to my account, and that was
it.

Q And the name on the account?

A It had my name.

Q I take it then, from the answer to the previous
questions, that you have never controlled funds outside of
the United States in another name?

A No. Since I have retired, I haven't had any.

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Q No, within the United States —

MR. MONSKY: Let me ask, can we go off the record
one second?

(Discussion off the record.)

BY MR. HOLMES:
Q Mr. Shackley, while we were off the. record, we
discussed a couple of examples of possibilities of how money
or representatives of money can be controlled, indirectly.

For example, an oral agreement with a person to
act as agent or representative of you in controlling money
for you or, as another example, a bearer certificate or a
letter to a Swiss fiduciary naming you as the true owner of
the particular account or other agreements by which a person
can become an owner of an account without having his name
on the account or any paper evidence of his control over the
account, and you have indicated that not only do none of
these examples apply to you, but no other similar exeunple
does.

And I'll ask you this question to cement that.

Mr. Shackley, other than government funds, have
you ever had, through any mechanism, control of any funds
outside of the United States other than your Kuwait account?

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473

A I was just talking about the Bermuda account.
Q And your Bermuda account?

A No, I haven't, other than those that we have
discussed. That is, the Kuwait account and the Bermuda
account.

Q And that includes the years that you were in
government service but excludes money that ?ou controlled
on behalf of the government during those years?
A Yes, that's correct.

MR. HOLMES: Mr. Shackley, I'd like to prevail
on you, if I can. I know you're tried, but I'd like your
opinion on one thing.

We can go off the record and discuss it, if you
want.

Let's go off the record.
(Discussion off the record.)
MR. MONSKY: On the record.

EXAMINATION
BY MR. MONSKY:
Q Have you heard of a company called ARVAG —
A-R-V-A-G?

A No, I have not.

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476

474

Q A Swiss corporation?

A NO.

Q ICT, International Chemical Trading?

A No, not familiar with that.

Q Karma Trading Corp.?

A No. I don't believe I've ever run across those.

Q Overseas Corporation?

A No, I'm not familiar with them.

Q And with respect to BDM, my understanding is, you
haven't had an transactions with them in the past few years?

A I have never really had a transaction with them.
I had one conversation a number of years ago with a friend
of mine, who asked me to fill out some forms for him to be
on a consultant call list and never did do it, and I have
never done any work for them.

MR. HOLMES: That concludes our deposition,
Mr. Shackley.

I appreciate your time.

(Whereupon, at 7:25 p.m., the taking of the
deposition was concluded.)

UNHLASSFIEO

477

THIS IS A COVER SHEET

FX)R

INFORMATION SUBJECT TO

Basic security requirements contained in Department of Justice Regulations
(28 CFR Put 17).

The unauthorized disclosure of the information contained in the attached docu-
ment(s) could reasonably be expected to cause exceptionally grave damage to the
national security.

Handling, storage, reproduction and disposition of the attached document($) will
be in accordance with policies and procedures set forth in regulations cited above.

^*^ L2^ **^7

fflto mtr *tm 1$ —rltiM*^ »*«■ itpfmt^ ficm datn/M iocwmnal

478

DEPOSITION. OF GASTON J. SIGUR

Tuesday, April 21, 1987

U.S. House of Representatives,
Select Committee to Investigate Covert
Anns Transactions with Iran,
Washington, D.C.

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^3 The committee met, pursuant to call, at 2:00 p.m., in

14 Room 6205, Department of State, Washington, D.C, with

15 w. Neil Eggleston (Deputy Chief Counsel of the House Select

16 Committee) presiding.

17 Present: W. Nell Eggleston, Deputy Chief Counsel,

18 Timothy E. Tray lor. Counsel, Steven Berry, Associate Staff

19 Member, Minority Staff, on behalf of the House Select Committee

20 OD Covert Arms Transactions with Iran;' and Terry A. Smiljanich

21 on behalf of the Senate Select Coonlttea on Secret Military

22 Assistance to Iran and the Nicaraguan Opposition.
23
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479

Vihereupan>

GASTON J. SZGUR
having b«en first duly sworn, was called as a witness herein,
and was examined and testified as follows:
EXAMINATION
BY MR. EGGLESTON:
^ Q It is Dr. Sigur, correct?

8 A That is right.

9 Q Olcay.
A However you want to do it.
Q Or. Sigur, my name is Neil Eggleston. we have been

^2 introduced. I am Deputy Chief Counsel of the House Select
^3 Committee to Investigate Covert Arms Transactions with Iran.

I am here today pursu^tnt to the Committee ' s mandate to
^5 investigate the circumstances surrounding the Iran/contra

16 affair.

17 The paraBMters of the investigation are all spelled out

18 in what !• called H. Resolution 12. Terry Smitjanich is with

19 the Senate Connittee and he is also here and when I am done

20 will h«v« questions on behalf of the Senate that he would

21 like to pose to you.

22 So it is really being conducted in the guise, I think,

23 of a joint deposition of you.

24 Let me start, if I could, by just asking you if you

25 could generally tell us in a brief fashion about ;^ypur own

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background, where you were born, grew up, your education

and your jobs prior to the time you first began with the NSC.

A Well, of course, I have got a number of years behind
me.

Q That is why I —

A That is quite a little ways. I don't know how far
back you want to go.

U Let's just go with your education a little bit.

A I got my degrees from the University of Michigan,
B.A. , M.A. , and Ph.D., and I did my work in history. Far
Eastern h story. Then I worked at the university for a time
as an assistant director of international affairs, did a
little teaching — in the international center, not internation
affairs, assistant director of the international center,
teaching.

Went to the Asian Foundation -for quite a number of years.
I was with them from 1956 through 19S9 and then I took off a
couple years. I was with the Gotham Foundation and did
some teaching in Japan and then I in 1962 went to Afghanistan
as the Asian Foundation representative.- stayed with that
organization until 1972 when I became the director of the
Institute for Sino-Soviet Studies, professor of international
affairs, George Washington University.

Stayed there until 1982 when I went with the National
Security Council in July of 1982. And I took leave from the

-^n""^

"^MClHO^eihi^p SEGRFT-

ijpiCLASS^r:::^^

481

university; and went bac)t to the university full time in
October of 1984, remained a consultant to the National
Security Council and was at the University until March 1986
when I took this job.

Q What is your current title?

A Assistant Secretary of State for East Asian and
Pacific Affairs.

Q Maybe if you could just tell me very briefly what you^
current job entails, what are your duties here at the State
Department?

A Well, I am responsible really for all affairs
involving the East Asian and Pacific region and for policy in
that region. That covers China, Japan, Korea, Southeast
Asia, Taiwan, Australia, New Zealand, Pacific Islands, Burma.

Q Let me —

A I am chief advisor, in other words, I guess the way
we put it, to the Secretary of State.

Q Let me *rect your attention back to the period of
tine between July of 1982 and October of 1984 when you were
actually, I take it, assigned to the »SC not as a consultant,
but you were actually there.

A That is right.

Q Can you describe what your jobs were or what your job
was during that period of time and what your duties were?

A Again, from the point of view of the National Securit

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rvr-^JboiUji

Council, I oversaw Asian security nutters, Asian affairs

as the NSC operated. I was responsible to the National
Security Advisor at the time and I came in when Bill Clark
was the National Security Advisor and I stayed on when
McFarlane took over and then, of course, stayed as
consultant. My duties were quite broad in the sense that I
dealt with the whole of East Asia and the Pacific and I had
two people who worked with me.

Q Who were they?

A David Locks and Dick Childress. Locks was China,
but also he was, basically he had an academic background,
I mean, economic background so he was helpful in that regard.
Childress was a military man so he was helpful in that
regard. I was not, of course.

I didn ' t have that kind of background .

Q Were you then Director of the Directorate on East
Asian Affairs?

A Yes, as the Director.

Q And there were these two other people in your
Directorate?

A Yes.

Q I take it your job was basically, advising and
coordinating, advising the National Security Advisor on East
Asia?

A On East Asia and the Pacific, yes.

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Q Did your title and job description remain
substantially the same throughout the period of time?

A Throughout the period, except in July of 1983
I was named Special Assistant to the President.

Q Was that a name change, change of title or just
a change in the ]obs?

A No. Didn't mean any change in job at all. i did
exactly the same thing.

Q I understand that --

A The working title was Senior Director and Special
Assistant to the President which meant you could eat in the
White House mess.

Q I had heard there were changes in the way it was
set up.

A But the job was exactly the same.

Q OJcay .

A The job was no different at all.

Q Let m« take you then before I sort of go back to
that time period, after you left there in October 1984, and
went back to — did you say Georgetovm' or George Washington?

A George Washington.

Q You remained as a consultant for a period of time to
the NSC.

A Yes.

Q How long did that last?

yNJiftSsrr.iii) top secret

484

A I remained until I cane here in March 1986.

Q Did you — if you could describe the circumstances
around that. Did you have an office there still?

A I kept the same office I had and, in fact, I still
oversaw the policy and still reported directly to the
National Security Advisor, but I didn't spend nearly the
amount of time on it. I tried to spend, say, up to three or
four hours a day, I would usually go over, say, about a
quarter of seven in the morning or something, and attend the
7:30 staff meeting, stay maybe until quarter of nine or
nine, and go over to the university and spend the rest of the
day there and go back for a couple of hours in the
evening.

Examination
By Mr. Berry:

0 I an Steve Berry. Was that normal or usual? Were
there other consultants with similar duties?

A I am not sure anyone else had anything quite like
that, Z don't believe.

Q You retained all your securiTty clearances and
everything and had the same access?

A Yes. That is right. And there are consultants
who have done that, retained their security clearances as far
as I know.

Q Were there other consultants at the time that did

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that?

h I can't tell you. I really don't Icnow.
EXAMINATION
BY MR. EGGLESTON:
Q Were you replaced? Was your position in 1984

filled?

A No. It was not.

Q So you essentially retained your job?

A Yes.

Q How many people v(f^nq under you, did the same
two individuals remain in your directorate?

A Yes.

Q I take it after Mr. Poindexter became National
security Advisor you continued to consult with him?

A Continued the same, that is right.

Q Let me as)t you a few other questions about the
organization of the NSC or about your participation. During
the period of tine that you were there as a regular senior
director, 1 take it you attended the senior members staff
nM«tinga; ii that right?
A Yes.
Q And during that period of time were they held on a

regular basis?

A Yes, as I remember they were.

Q Did you continue to attend those?

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A I continued to attend those.

Q I understand that during 19 35 and 1986 they were held
on four days a week. Am I correct in that?

A I thought they were £ive.

I don't know where you got the four from.

Q I thought for some reason on Wednesday it was
omitted.

A You may be right about that. Sometimes there was no
meeting on Wednesday, but I am not sure that was true all the
time.

Q It is not important.

A That is right, though. Sometimes Wednesday was
omitted because there was a breakfast that Poindexter and
Shultz and Weinberger held, and Casey. That is right. Yes.
You are right.

But that waa not always the case. Quite often, in fact,
those breakfasts were not held. But you are right about
that, yes.

Z had forgotten that.

Q Z assumed you had attended them. I understand
those were for senior members. Were there also, I take it,
staff meetings that involved the entire staff of the agency?

A Yes, one a week.

Q Did you attend those as well?

A Not always. Often not. Sometimes.

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Q Okay. I thought you might not have.

A Not always.

Q Let me, having covered the background of your
involvement at NSC, let me ask you questions about the
various areas that are of particular relevance to this
investigation.

A Sure .

Q What I hope to do is ask you as to each of the
countries your best recollection and ask you some sort of
follow-up questions.

Let me first ask you aboutl^^^^Band if you could
just relate to me as best you recall your involvement in
that event I would appreciate it.

A Well, as I said last time, Ollie North came to me and
I thought it was in 1985 and I hav« been looking over my
calendar, I see I had a breakfast meeting with^^^|^^m|ii

1984 but 1 can't believe it was that early on. I
thought it w«« in 1985, but I don't have anything in my
calendar on that. In any event, Ollie -North came to me and
asked if I would, he said that he and Bud wanted to know if I
would get in touch wiU^^^fcecause they understood that

ould be interested in helping in Central America with
the contra*. ^^^^

And I said I would, so I had met witA|H^I believe
it was for breakfast at his home on a Saturday — that is

488

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why this dat* oe^HHVl984 caught my tyt.
Q Is that a —

A Sut that seema awfully early. I didn't think it
was that early. But maybe it wa*. Maybe I an wrong about
that. But I didn't think so.

I thought it was 198S. In any event, I had
breakfast with hin and I talked to hin about this. Ollie
had told me that it was a desparate situation for the
contras and that they needed funds for food and clothing and
medicine and all that sort of thing, or everything, I guess.

So I spoke to^^^B in that regard and he said, well,
they had an interest in helping financially, but through the
United States Government.

I went back after the breakfast and I saw
NcFarlane and I told Bud about this conversation. I said
they say they have an interest, but they want to provide the
money through the U.S. Government.

He says that is impossible. That can't be done.
Can't do that.

So X told North that, what Bud had said, as well as
and then the next I had a call froa Ollie and I can't
remember, again, I thought this was a relatively short period
of time, but it could have been longer. I mean, I thought
it was weeks. It could have been months, perhaps, but I —
I just don't know.

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But In any event, he asked if I could arrange to
wlth^^Aand have him talk^^^^^ And he
gave.aa I recall then — I am not sure I said this last
time — but I think if I remember right, he talked about the
having someone f rom^^^^^^^^^^^^^Kr
^^^^himself meet, get together with the centres, with some of
the contras.

In any event, I arranged a meeting betweei^^^Hand
Ollie to take place at the Hay Adams Hotel. The only —
I don't have a date for that. I have a Hay Adams Hotel
tea with nobody listed which is August 2, 1985. That is
possible.

I can't swear to that, but it is possible that that
was the date.

Q Okay.

A In any event, I brought 'Ollie over there, introduced
him to^^^Hand I left and I don't know what the
conversation was. The next thing I heard was -- again, I don't
know how long a period this was, I really don't — I didn't
think it was that long, but I coul ' be' wrong, the next I
heard was that Ollie telling me^^^^Hl telling me, I guess,
I had a call fron^^^Hthat^^^^Hwas prepared to offer
million dollars to the contras.

So I told Ollie this and again on the timing I really
don't know how long a period of time this took, bxit Ollie callec

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me back and asked If X would cal

«y to him that

th«r« would be someone representing the contras to 90 by his
office and who would tell him how to provide the funds. He
may conceivably have given me a name. If he did, I don't
have any recollection of it.

He might have. He may not have. I don't know.
He just said someone would in the next couple of days. Then
^^^H^^Htold me that that had taken place.

Now, that is all I know. I don't know whether the
funds actually got anywhere or what. I don't know anything
about it.

To pursue that, there was a period of time that
passed when Ollie came to me again and spoke of the desparate
need of the contras and whether^^^^Hcould do anything
further financially and I called^^^^Bmentioned it to him,
he said he would check, he came bxdk and said, yes, and I
told Ollie and that is I think the last Z heard of it. But
my understanding is something was done further.
Q On the second occasion.
A On the second occasion.

Another million.
0 Let me take you back through thie and ask you
some other sort of detailed questions. First, what date
was it that you thought the meeting was in August — let me
ask you this way — your calendar reflects a meeting in

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August 1984 wlth^^^^^^l You thought it v»b c
Saturday. I didn't g«t down to th« exact date th£
calendar reflected that meeting taking place.

A August^^H But that seems to early. I can't —
it is hard for me to think — I used to meet^^^H you
understand, about once every couple months either in his home
or at his home or at a restaurant. We used to get together
and talk about our relationships.

Q Okay.

A So that was fairly standard procedure to meet,
but I don't have any other breakfast as such written down in
1985. I am pretty sure it was a breakfast. And I am pretty
sure it was a Saturday.

Q And August 18, 1984, is a Saturday.

A That is the only one I have written down. But
that doesn't mean it didn't happen in 1985, you see what I
aa saying. Z just want you to be sure I am not saying that
that was it.

It may have been and it may not- have been.

0 All right. Let me ask yoa, at the time let's just
assume, although I understand you are not saying it was around
August 1984 that this meeting took place —

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A It could hav« b««n August 1985 i« what I am ««ylng.
0 But let'i say a» of August 1984 did you know that —
I hav« Colonel North's calendars so I was looking just to check
some stuff and we will take a look.

A Fine.

Q Did you know that at that time, as of August or
so of 1984, that the contras was one of the areas that was
within ~ I guess it is called an account or one of
Ollie North's accounts?

A I didn't know specifically what Ollie did. I
assumed — there was no doubt that he dealt with the
contras and with Central America. No question about that.
But how much it was his account, I didn't know that. I
really didn't know what he was doing.

Q All right.

A I really didn't.

Q Did you have much previous -- prior to these
events that you will tell us about and have told us about —
did you have much previous contact with Colonel North?

A Bardly any.

Q He did not come within East Asian areas at all?

A Oh, no, no. If he did, not with me.

Q Hot with you, okay. You said as you went
through this that the first thing that happened

Iwea that Colonel North came to you

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and asked you.
A Yes.

Q Did he come to you in person or on the phone?

A In person. He talked to me in person.

Q Was anybody with him?

A NO. He was by himself.

Q This was at — let roe help the time out a
little bit. It seems to me at one time you be able to
remember is the October 1984, whether or not you were -- in
October 1984 is when you ceased being a regular NSC employee
and also have your George Washington duties.

DO you think this took place in that period of
time that you had already gone back?

A I can't say. As I say, initially I thought it^ook

place in 1985.

Q Right. -...-
-.. &..- That was my initial thinking until I saw that thing
on the book. I thought all of this took place in 1985.
Q Right.

A Until I looked at my calendar, then I got
slightly confused when I saw this. That is if only thing
because I thought it w.. 1985. That certainly was the way
my thinking was. It was 1985.

Q was it just the two of you in the office?

A 1 am not sure it was in the office. It could have

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b««n anyvh«r« ovar thara.

Q In tha NSC?

A It could hava baen anyvhara, but it was just tha
two of us. I aa pretty sura thara was nobody alsa there.

Q Ha didn't bring anyone with hin and you didn't
hava one of these two guys with you?

A No. There was nobody there. To the best of my
recollection, it was just the two of us when he said he and
Bud McFarlane had these discussions and they wanted to know if
Z would speak with^^^Kabout it. That was it.

Q I know that you indicated ha told you about the
situation that the contras were in, they had run out of money.

A He gave a very strong case about how terrible their
situation was.

Q Did ha tell you what the money would be used for?

A No. Basically I got tha~idaa that it would be,
again, humanitarian, ha talked about the terrible shape they
were in, all tha things they needed, medicine, there was no
madlcina. Everything.

Ha want into a long, long story alout tha situation,
you know, and how terrible it was. Not specifically,
though, no.

Q How long did you talk to him?

I know I am asking you about things that happened
a long time ago.

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A I don't think it lasttd longer than fiv« minutes.
But I don't know. Five or ten minutes, maybe.

0 I take it at this time you kne(
fairly well.

A Oh, I have known^^^Hfor a long while.

~0 And do you have any recollection, how did you get in
touch wit^^^^^H just call him up?

A I called him up on the phone, I think.

Q How long was that after this encounter with
Colonel North.

A It is hard for me to say. I would guess it
wasn't that long. A couple weeks maybe.

Q Okay.

A Something like that.

0 Did you have the sense from Colonel North in his
discussions with you that it was an emergency situation?

A Oh* sure. No question. He presented it in that way
Yes.

0 Did he give you any indication of how much money
he was hop/ing that^^^^^<rould be willing to give?

A As much as possible, I think, is the way he put it
and he was talking about several million, I think.

Q Is that right, your impression was —

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A Hy Impression, was, y«s, Z can't r«iMinb«r exactly.
But h« was talking about as much as possible.

Q Was th« m««tln9 witt^^^Bthen scheduled
specifically to discuss this?

A That was my intent, yes. Though I think we talked
about other things, other possible relationships, but the
meeting was basically for this purpose.

Q Did —

A No one else was there.

Q Where did the breakfast meeting take place?

A In his home.

Q In his home?

A Yes.

Q Has anyone there during the breakfast?

A NO.

Q Just the two of you?

A Right.

Q But during the course of that, how did you relay
the request? Did you relay it as having come from
Colonel North and McFarlane or from the O.S. Government,
maybe if you could flesh that out.

A I can't remember basically how r put it, but I
certainly put it in terms of coming from McFarlane, I mean,
the National Security Advisor, no question about that. That
is the way I put it.

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Q What ~ do you know what you told him the monay
would b« us«d for?

A No. As I recall, I told him the great need that
they had told me about and so forth. I am not sure that I
ever specifically said, other than I told him of the need
and the things that they have to have.

Q Old you tell him ~ did you ask for a specific
amount of money?

A No, I don't think I did. I think I talked -- no,
in fact, I am pretty sure there was no specific amount of
money .

Q Was there any discussion about the amount of money
they might want to give or not give during that time?

A NO, I don't believe. To the best of my recollection
I don't think he said anything about that. I think the first
time he said anything about money .was when he came back and
said they could provide a million dollars. I don't think
he said earlier.

Q Nh«n you first talked to Colonel North about this
did you have any discussion with him or qualms about whether
or not there was — donating money by third countries was
legal or illegal?

A I asked hin.

Q You did?

A Yes, I said, are you sure everything you are going

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to do here is legal? He said, oh, yes.

Q Did you get any sense of how he knew it was legal?
A He said they had checked it out with lawyers.
Q Did he tell you what lawyers?
A No.

Q Did you have the impression it was the White House
Counsel's Office?

A I had no impression at all. I really didn't think
about it one way or the other.

MR. BERRY: What was the policy at that time at the
NSC, especially when you came into a grey area where you
thought you should at least check with legal counsel, was the
policy to check with NSC legal counsel or what was the
stated policy of the NSC?

THE WITNESS: I can't answer that because I don't
know what that was. Z have no idei.

MR. BERRY: There was no enunication of a policy
then that you can recollection?

THE WITNESS: Not as far as I knew.
MR. BERRY: When Mr. McFarlane indicated to you,
you cane back to —

MR. BGGLESTON: Could we wait until I get to
that?

MR. BERRY: Sorry.

MR. EGGLESTON: Otherwise we will have a problem.

jSiaSS^F^SBOP SECRET

499

Do you hav* anythin? els* about what w« hav« now?
MX. BERRY: Just the l«9al question.
BY MR. EGGL£STON:

0 Okay. Old you talk to anybody else other
than Colonel North about whether or not there might have been
a legal problem?

A No.

Q During this course prior to talking t
the first time, did you talk to anyone at the State
Department or anybody else about this?

A NO.

Q Did Colonel North ask you not to or was there any
reason not to?

A Not specifically. I don't think he specifically
asked me not to, I just didn't.

Q Okay. 1 am curious that"it is a contact between
the States Governnent and^^^^^^^^^^^^^^^^^H
involving asking for money to be provided at the United
States Govemawnt's request. Is that something that you would
have normally brought the State Department in on or is that
the kind of thing —

A I never thought about it one way or the other. I
thought this was a request from McFarlane. He was my boss and
I did what he asked me to do. It was as simple as that. My
assumption was that this was agreed upon policy.

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0 Okay.

A Z was not doing something that othsr people — after
all. McFarlane was in daily contact with Shultz and
Weinberger and Casey. I assumed that these things were --
Q Right.

A — were done. I didn't have any reason to question
that. Why should I think that there might have been
something else?

I was asked to do it. I did it.
Right. Did you prior to the time you spoke to
did you discuss it with McFarlane at all?
A Not prior. It was after I talked. I had no reason
to doubt Ollie at all. I didn't question him for a minute
and obviously when I spoke to McFarlane there was no reason
for me to have done so because it was right, I was
correct. Everybody knew, at least t thought, that on matters
involving this area Ollie spoke for McFarlane. There was
never any question about that.

Q By "this area", you mean the area of the contras?
A Central America, yes.

21 Q So you regarded Ollie as clearly having authority

22 to do this?

23 A Not a shadow of doubt.

24 Q To do this thing.

25 A No doubt.

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0 W« h«v« covered that breakfait th«n. A{t«r th«
breakfast, you come back and you ••• McFarlane at that tiin«?

A y«fl.

0 Do you recall where you saw him?

A In his office.

0 Was Colonel North present?

A No.

Q Just the two of you?

A Yes.

0 And I take it — what was the conversation then?
You told us —

A Simply Z told him that I had had — it was a very
short conversation. There was no more than a few minutes.
I told him in accordance with the conversation I had with
Ollie and the request he and Ollie had put to me, Z said I had
breakfast with^^^H talked with him about it. He said they
might be able to help but they would have to do it through the
U.S. GoverniMnt.

And McFarlane said that is not possible. Zt can't
b« done that way.

Q Did he indicate to you why it couldn't be done that
way?

A No.

0 Old you have any understanding why it could not be
done that way?

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I thought there was probably something wrong with

it.

wrong?
A
Q

But you didn't have any specifics on why it was

I didn't have anything specific, no.
By doing it through the U.S. Government, I take it
you understood^^^^^Bwould —

A They would give the money to the U.S. Government,
that is right. My assumption, you see, it is interesting,
rather than me bringing it down like that, rather than me
thinking it was necessarily anything illegal about it.

I didn't see it in other terms. I saw it in
those terms perhaps. You know, this is the way I looked
at it.

Did Mr. McFalrane indicate to you how it could be

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503

done?

A No. But as I say. when Z talked later with
Ollie saying about how he wanted to do something about
introduci(tg hira to the contras, I assumed that is the way he
and Bud had decided on it, to try it that way. See whether
that was possible.

Q To do it direct?
A Do it direct.

Q As of the time you spoke then to Ollie, was that a
conversation you had after you talked to McFarlane?
A Yes — about the contras?
Yes.

Yes, oh, yes.

Did Ollie already know what you had said?
No, I told hiffl what I had said.
I wonder if you had an Indication that McFarlane
had told Ollie that?

A Z don't know, it is possible he might have. I told
hia in any event what McFarlane said to me. I can't recall
how he reacted. I mean, whether he may have known. It is
possible. He may have spoken to McFarlane. Yes. Sure.
I don't know.

Q You told Colonel North that it was not possible the
way^^^H wanted to do it according to McFarlane, what was
Colonel North's reaction? What did he say?

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A I don't know that h« said anything at the tlm«. i
think h« sort of shrugged. It was later, I believe that he -
again, as I say, it was a little later when he came to me about
wanting to meet with^^^^^^Hmade comments about introducing
somebody in that outfit to the contra leadership.

Q Did the discussion with McFarlane or where

McFarlane said you can't do it that way, did that prompt you
to ask Colonel North about this, is this okay, is this all
right, is it legal?

A No. I thought, frankly, that was the end of it right
there. Z didn't think anything would proceed from there.

Q All right.

A I had done what they asked me to do. I did it.
That was that. But he came back again.

Q Then I take it Ollie came back. I think the first
time you told us, at least to me, you indicated he called you.
Do you have a recollection he called you on the phone as
opposed to meeting with you?

A Z can't remember. He might have called me on the
phone .

Q Z know this was the occasion where you started to
wonder about just what the timing was. Do you have any
recollection about a year, that is a long time?

A The only — I know, a year seems an awfully long
time, and Z can't believe it was that long. Therefore,

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I think it was in 198S because I do know when he came back to
me for the second amount, when he asked again if they could
help further, and I checked with^^^fon that, that
took place in October of 198S. I know that because there
is a recollection that I have of someone who was in my

I didn't talk with him about this. I simply —
what I am saying I recollect the two things together.
Therefore, I know it, it is in my mind as being October.

Q Let me just probe your recollection.

A Of 1985.

Q Just to probe your recollection of these events,
was it a longer period of time between — it %«}uld strike me
it would be a fairly short p/eriod of time between your first
contact with^^^H about this and the time Ollie comes back
and a longer period of time before he wants you to go back to
them again.

A I don't think it was all that long. I don't think
it was all that long. My thinking would have been three
months, four months, something like that. ' But if that thinkinc
of August 1984 is correct, then we are talking about a year.

0 Right.

A Which is not impossible, I guess. I have got to —

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but it just strikes m« as difficult to see it that way.
0 To think it was that much time?

A TO think it was that much time. But I can't swear
to that. I Just have trouble on that business of trying to
accept those times.

Q When Ollie called you, in any event, putting aside
when it might have taken place, when Ollie called you again and
said he wanted to meet withal take it at that time
you know that it is again about the contras and solicitation
of money from a third country.
A Sure.

Did you ask him what happened?
No, I did not.

Was that just a brief conversation?
I don't know how long they met.
I am sorry. I mean, thi conversation about
setting up the meeting with North?

A Oh, that was just nothing more than a minute and
asking me to set it up, that was all.

Q And so then you do set up the meeting with
two of them at the Hay Adam, and then after the introduction
I take it, you left?
A I laft.

Q YOU simply disappeared? You indicated before that
you had « date of August 2, 1985, in your calendar.

507

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A I havt that do%ni hera aa tha Hay Adaaa te%. But
X had tea at Hay Adant on nwunarous occasions so it doesn't have
to be that. I will tell you the only reason I wrote that down
as being important is because it ties in with the
conversation I have listed on my calendar as I having had with
the^^^^^^^^^^^^^^^^^^^^^^^^^H It is
possible those two things were togetherabou^this.

In other words, it fits in timing, but I can't — I
could be wrong about that. It may not be that. It could be
another date involved there.

Q But just to finish our the rest of this story, so
you leave and there comes a tine then when you hear back from
again?
A Yes.

Is that right?
That is right.

How do you hear back from him?

I can't remember. X think he called me or said to
me at a lunch or dinner or something, I can't recall.
Q What did he tell you?

That they were going to assist.

Did he tell you how much? >

A million dollars.

Did you have any discussion by this time with'

about how the money was going to get from them to the contras?

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No.

0 Did h« ask you about what his next step should be?
A I can't remember whether he ever asked me that or
not. I don't think he asked me specifically. I told Ollie
about it, you know, that he had said that they could assist.
Ollie said he would make the arrangements or something like
that. For it to be done, you know. I don't know if there
was anything further that took place between^^^Huntil the
next time.

Q And thereafter as far as you know. Colonel North
took care of the arrangements of actually getting the contras
and ^^^^^^^^^H together?

A That is right. I know absolutely nothing about that
He said nothing to me about it and^^^^^^^H said nothing to
me about it.

I have no idea.

Q Okay. Then there comes a tine when Colonel North
comes back to you again.

A For more money.

Q Saying they need more money.

A Right.

Q Do you remember anything more about the
logistics of that?

A No.

Q Did he come to you in your office or a phone call? i
(■

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A No, no. X don't rtmenbcr that. It could h«v« b«cn
X think it was probably — remember now, I saw him almost
every day at that senior staff meeting.

Q Right.

A It could have been after that. It could have been,
you Icnow, when he said something to me. That is possible.

Q You indicated before, I think, and X am just
recollecting this, you placed this around the time of
October 198S because of the ambassador — >

A The second go-around.

Q Was it the day of the second go-around?

A I am not sure of the date. That I can't tell you.
But I recall it being around that time because I had — North
had talked to me about it. I recall and I was seeing our
ambassador designate and the two things stuck somehow in
my mind. They happened together.

Q Right. So you are able to place that?

A That is why I am able to place that in October,
which I think is pretty accurate as far as I remember. I mean
it was October, maybe late October, but somewhere in there.
Somewhere in there.

Q Did you contact^^^Bagain then?'

A Yes. I did.

Q And what happened? What did you tel
We need more money?

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A That if what X told him. I talked to 01li«, oilla
tells me that they are again desperate ,^^^| said i will
see what I can do.

Q Then you are out of it?

A Then I am out of it.

0 So you don't know what happened?

A No.

Q Did you get the impression from|
meetings that more money had been sent?

A Oh, yes, he told me so.

0 Did he tell you how much?

A He said another million.

Q Other than those two occasions, did Colonel North
ever approach you about getting any other money from I

in later

A No.

Q There comes a time in the summer of 1986 where the
contras end up pretty hurting for money between the time that
the NHAO money runs out and further congressional money
that has been appropriated is availabre to them. Did he
approach you at that time?

A I don't recall that.

Q You don't think so?

A No, I don't think so.

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EXAMINATION
BY MR. BERRYt

0 Just one question, If I could, or a couple.
Old North ever describe the type of assistance

which he wanted to solicit frorai

A My understanding was we were talking
fundamentally about humanitarian stuff. That is, he talked
about medicines, food, clothing. They needed everything,
obviously. I mean, there was no question.

Q Ha never used the magic phrases such as
humanitarian only and not lethal?

A I don't know as he ever said that to ma, but I
can't remember that. Not in that sense. It is possible. But
I don't know.

1 don't recall. It was clear that they needed everything
they could have. Everything theycould get, but he talked
about, as I say, about medicines, he talked about that, yes.

Q You got the impression that it is basically
fungible •••istanca, that is, dollars or monies, so that —

A Yes. No question that ha was asking for money.

Q Okay. Did Mr. North ever — Colonel North ever
at any tima request that you keep your t*lks wit!
compartmantalizad, that you never discuss it with anyone
else?

A I don't think so. I didn't, but I don't think he

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ever asked that.

0 Oid^^^^^^l ever indicate to you^hat he was ever
contacted by any other U.S. Government agency or official
about this issue?

A No.

Q Do you know if Ollie North ever indicated that he
contacted any other U.S. Government agency about

A He never said anything about any other U.S.
Government agency. It was never mentioned.

0 As far as you knew, you were the only contact with
U.S. Government was having withj

A That is right.

Q Okay.

EXAMINATION
BY MR. SMILJANICH

0 Just a few questions.

After each Incident with regard t^^^^^^ you
said earlier tha^^^^^^^H con firmed after the fact, the
fact that it had gone through successfully.

A Yes.

Q Is that right?

A Yea, or they had provided it, however they did it.

Q Is it also tr\i« that Colonel North also advised
you after the fact on each occasion that, in fact, it had
gone through?

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A Yei, I think that is right. I think he did.

Q Did h« give you anymore details when he told you
that things had taken place succe9afully> did he tell you
what had been done or anything like that?

A Not a peep.

0 On each occasion your understanding was the donation
was $1 million in cash on each occasion?

A I guess so.

0 That was the impression you had?

A That was the impression. It was $1 million. Now, you
know, that was my understanding. That is righ_t

Q He didn't react one way or the other, adversely or
A He didn't react. I don't think he said anything.
He just kind of brushed it off. It was nothing, he said to

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0 Can you put any time frame on that mention by

A I think it would be 1985, sometime, but it is hard
for me to put it when. Probably somewhere irpetween the
time of the first amount and the second amount, probably,
but I can't --

MR. EGGLESTON: Whenever that happened.
THE WITNESS: Whenever those happened, right. It
is hard for me.

BY MR. SMILJANICH:
Q It is down that black hole somewhere.
A It is down that black hole somewhere and I can't
remember it.

Q All right. That is all I have.

BY MR. EGGLESTON:
Q I have just one more on this and I will go on. I
indicated you had one conversation about this general area of

ind solicitation with Mr. McFarlane, did you have any
other conversations with hia?

A No. That was all. Just that one.
Q Just that one?

A I never spoke to hi* again. My assumption was
quite clear, that Ollie North represented Bud in this case and
there was no reason for thinking otherwise.

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0 Let iM go on to^^^^^^Hknd I think it might
maXa fens* to follow the same format which is I win ask you
to remember whatever you do remember and go back and ask you
to. Why don't you launch in?

A Ollie asked me and, again, it is probably sometime
in the summer of 198S, again, talking about the needs and
so forth, in Central America. It was broad, Central America,
contras, but Central America. And if I knew anyone at the

whom he could talk to. I don't think, as I
remember it, that he said anything to me about necessarily

trying to get money from them. He wanted to talk to them
about the Central America situation and the contras. I said,
yes, I knew a man over there that he might talk

Ha has a^^^^Hbackgr(?und. Ollie asked me if I
would call hia and try to set up something with him. I said
I would call hia. So Z called ^^^^^^|and I think he
caa* by to see ma. W* had some other things to talk about.

As I recall, he cam* by to see m* and I mentioned tha
Colonel North wanted to talk with hia and talk to him about
Central America. H* said h* would b* quit* happy to. I told
Olli* that. I gav* hia hi* nunb*r and 1 never heard another

thing about it.

That was th* end of that. I have no idea whether

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thay «ver met or whether they did eny thing.

Is ^^^^^^^H
A I think BO, yes.
0 Do you remember his first name?
A No.

Q Did you know him well?

A No, I just knew who he was. I had met him

once or twice.

0 Did you know what his position was?
A Yes, I

is very close to
I That job always has that to it.
Sort of a personal representative. That is why I thought if he
wanted to talk to hin «ibout Centr'%1 America, that was probably
the guy to talk to.

Q Is this the only tine that — I better not ask that--
can you place this conversation with Colonel North and these
events with Colonel North at all in a tine continuum?

A The only thing I can say is Z have on my record
that I met witl^^^^^^^^Bin my of f ice >on August 2, 198S.
That is probably it.

Probably. I can't swear to that because I met
him a couple times. But that is probably it.

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Q So that if th« date that you would have met with

^^^ Colonel -^
A

0 ^^^^^^^^^sorry, after Colonel North had asked
you to set up some sort of meeting?

A Well, I didn't really set up a meeting. All i
did was say that North wanted to talk with him and I gave him
North's telephone number and he could call him himself.
0 So unlike the meeting —
A I did not set a meeting up, no.
Q This is nothing you have ever seen before, so I
am not going to ask you to identify it, but Z have Colonel
North's calendar for this week, and it is the week ending
August 4 and on Friday, August 2, whicl» is the same day that
you have recorded. Colonel North ha
Gaston Sigur; and later, 2:15, it 'looks like Gaston.
A Well, I —

Q I am not suggesting this is necessarily right.
A I don't know what he means by that unless he means
by that that he talked to me about it there and I called him
back then about it and told hia what this guy had said, because
Z never met with those two together.

0 That i» what I would ask you. You have a clear
recollection that you were never in Colonel North's office witt
and Ollie North?

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A That li absolutely cl««r. I was n«v«r in that office
witC^^^^^^^H I don't Know th« ins and outs of this thing.

hav« gona down to his office. I have no idea. All
I Know is. I did not meet with those two together. I am sure
of that.

Q Did Colonel North give you the same sort of — we
went through this — the same sort of introductory speech?

A Yes, oh, yes, very similar.

Q And I take it then you assumed that it was involved
in solicitation of money, although he never mentioned that?

A He never mentioned it. It was probably in the baclc
■y my head, but all he said is he wanted to talk to him
about Central America and fill him in on what was going on
down there. This was basically the wa/ he put it to me. But
I have no idea how he talked to him, if he talked to him,
and what he said to him.

Q Did you ever talk to Colonel North about — did
he ever tell you that he had a nice meeting with^
or a terrible meeting?

A No. He never spoke about that^^^^Hconnection
again.

Q Similarly, I take it then you never spoke tc
Habout whether or not he had any dealings with Colonel
North.

A No. No.

^ ,'•-, ■: -:■ -,

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Q So, basically, you Juat don't know how that^^ory

ends?

A I have no idea what happened.

Q Did you ever discuss that at all with Mr.
McFarlane?

A No.

Q Or anyone else?

A No. I don't think I talked to anybody about that

Q But just so that I am clear, your calendar seems
to suggest that you had a meeting with

A On the second.

Q On the second.

A That is right.

Q YOU probably didn't write it -down, do you know what

time of day?

Does your calendar indicate what time the meeting

was?

A Let me see if I can get the time of day. I may have

the time of day. VOiat did 1 say, August 2?

Q Yes, August 2.

A 9:30 in the morning.

Q 9 t 30 in the morning?

A Ye«.

MR. TRAYLOR: 9:30 it says.

THE WITNESS: 9:30, August 2.

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<h^iHC ">ui-j<^^Avj-i X

BY HA. EGGLESTONi
Oicay

Q Can you tell us what you recall about that?

A The- only thing I recall is Ollie made some mention ta
me — I think it was at one of the staff meetings that
there was a ship going from North Korea, if I remember correctly
about this — I didn't pay too much attention^o it — to
Nicaragua and they were trying
to stop the ship. That is all I know

0 And you think that was just » single conversation?

A I am pretty sure it was just a single conversation.
I don't know he said anything to me again. As far as I recall
It is not impossible, but I don't remember.

Q
A

0
ship —
A

Did he tell you the name of the ship?

I think he did at the tioM but J, don't remember it.

You don't recall it. If I mentioned a number of a

If I saw it in the newspapers, but I ddn't

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rememb«r.

Q You don't hav« a current recollection?

A It didn't ring « bell with me. It didn't really
mean anything.

Q But your best recollection was it a single shot
item where —

A That was ny recollection.

Q Did he ask for any action from you?

A NO.

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MR. EGGLESTONi Sttva, did you hav« anything on that?

EXAMINATION
BY MR. BERRY:
Q Just on* question on th« ship, depending on the tine
frame we are talking about, there was^a Newsweek report]

about a ship from North Korea carrying arms to the
Sanini!

Do you know if that is the same time frame or the
same ship that —

A I really don't know.

Q The ship Colonel North was talking about?

A As I say, I don't recall focusing particularly on
that ship thing. Re mentioned it to me. I didn't pay much
attention to it. I heard what he said and, that was that.
I didn't focus on it particularly.

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MR. BERRY. Thank you.

MR. SMILJANICH: I hav« no questions. Thank you.

EXAMINATION
BY MR. EGGLESTqN:

w go on t^^|^^^HH^H^H|^^^^^^^|^
I think th« system has worked well up to now. I will let
you do the sane thing. Let ne get you started on this by
asking you sooething.

We might be able to help place a date in your head
which may or may not help you out. Did you have more than
one meeting with(flHH|^^^^^^d Colonel North?
A NO.

Q At the Cosmos Club?
A NO.

Q Where is the Cosmo* Club?
A 2121 Mass Avenue.

0 I will tell you that Colonel North has on his calenda
in late 1984, a meeting with you and^
Cosmos at — at 2121 Mass Ave. '
~ A That is what 1 got here.

)in the

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Q It Is Wednesday, November 28, 1984

A That Is the one, yes.

Q With Gaston Slgur an

A I thought it was June 19 when I looked over my
calendar, but I have it listed November 28, 1984, possibly

at Cosmos..^ I can't be sure about that. But Z
have it listed here. If he has that, then that is it. I
would accept that.

0 That is what he has.

A I will accept that.

Q Obviously, I will not vouch for his calendar but that
is at least the one he has.

A I would think that is right. I have something in my
book written here, I sort of scratched *it through and put
something else but I have it as po8sibl)^H^^^^^^^H)at the
Cosmos Club,. November 28.

Q Now that we have a start —

A Then that is right. It is November 1984. That is
the time it was.

Q Does that help you place^^^^^^^^^A event

A Well, I thought —

Q Assuming that is November 1984. '

A Then I would have thought ^^^^^^B event was be for

that.

Okay.

525

1 A That is my thinking th«t it was.

2 Q So you think it was probably August 1984?

3 A Could very well have been because it has as I said

4 clearly a breakfast on Saturday at his place and that is the

5 week I had it. So then we are talking about a long period of

6 tine that passed between the first and second. That is what

7 screwed me up, I think. I didn't think there was that much

8 time.

9 But that fits very well. That fits basically.

10 Okay. November 28, 1984. Do you want me to go on?

11 0 Then I will let you go, yes, go on. I wanted to

12 get you started.

13 A Anyhow, Ollie asked me again if I could introduce

14 him to — I think he knew the name, I think he saidj^^^H^^
' ^^^^^H|^^^^^^^^^^^^^^^ and he to him

16 Central America, the situation here. So Z said, all right,

17 I would set up something and I set up this lunch. I called
IS^^^^^^^^^^Rand told him that Colonel North who dealt

19 with Central America from our point of view would like to

20 talk with him.

21 He said, fine, he trould be interested.

22 So we got together for lunch and. Ollie gave

23 him a long pitch, as I recall, about the Central American

24 situation, the gravity of it, the seriousness of it, and all

25 of this, and talked about the need in that area for

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assistance. W« will have to b« cartful because, as x
ranenber, and I must say I don't think last tima I said this,
but Z do baliava that at that lunch I think I wasn't
there all the time. I think I went off and made a phone
call and went to the bathroom, so I can't be absolutely
certain of everything that went on.

In fact, I can't be anyway, because my memory is not
that good, but I do remember Ollie and ^^^^H^^^ talking
about the situation dotm there ^^^^f^^H^was very much
interested in it.

interested in Central America,

So they had quite a conversation. They passed me
by, I didn't know anything of this stuff, but they knew this
and they were talking back and forth about all this. Ollie
got on to the need down there for the contras, and he talked
to him about the sale of weapons, as I recall.

Again, I can't — as Z remember, I don't know
whether he specifically talked about s&le of weapons to the
contras. He talked about sale of treapons generally there.
Obviously, the contras would benefit. Whether the contras
would buy the wapons that is beyond urn.

1 wasn't — I didn't know how that went. It
could have been for all I know the sale of weapon* to Honduras

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1 just don't know wh«t th« conv«r««tion was, how it went in
that sense, because it was a very broad and general one, but
clearly he was talking about the contras needs and so
forth involved. No question about that.

Anyway, that was the gist of it. I left and I think
they sort of walked out together, as I remember, and I left
and that was the end of that and again the next thing I heard
was from

Q But a different person?

A Oh, yes, a different person. And he said something
to me at a reception or dinner or something, he just said,
oh, by the way, I sent bac)<^^^^H^Ka report on the
conversation betweenH^^^^^^^B)and Xolonel North,
said fine. And I think I told Ollie that.

That was the end of that. I never heard
another word about it.

Q Okay. Let me just ask a few more questions
about this one as well.

A Sure.

Q It is your recollection then that Colonel North
already knew of the name oi

A I think so.

Q So he had — •

He could have s«i<^d^^BB^B ^"^

528

' lyjr OiLOixxiA

1 he may have mcntlonisd hife by naiMr. x ««n't sw««r to that,

2 but X juit don't rememb«r that typa of thing.

3 Q Unlike tha other tituationa it was not merely a

4 request to set him up with someone from that country, it was

5 either —

6 A No, I think it was more specific. As I say, I

was<^^^^^^^^^^^^^H he

8 Q And had you known, did you have a relationship

9 with(

10 A

11 Q

12 A

13 Q

14 A

15 remember.

16 Q But your recollection i» that Colonel North asked to

17 speak directly to this person or t(

18 A I don't know, it could have been by name or could

19 have beeii|H^^^^^P^^P can't say.

20 Q But he had not previously — ' I shouldn't say

21 previously. I aa not sure I have all the dates right. But

22 as to the other people he had not specifically asked to speak

23 to(

24 A Oh, no, no. That is right.

25 Q When he asked you to set this one up, I take it once

Oh, yes, I know hin.

You have kno«m him for a long time?

I know them all over there.

I wasn't sure how long he had been here.

He had been here quite a litfrle while, as I

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1 again he indicated that he wanted to talk to the person about

2 Central America?

3 A Yes. Oh, yes.

4 Q Then you got the lunch together?

5 A Yes.

6 Q And during — let tne sort of probe your

7 recollection of this lunch a little bit more. Was it a

8 lengthy lunch?

9 A I wasn't — I don't know. I wouldn't say it was

10 lengthy. No.

11 Q Was it an all-afternoon affair?

12 A Oh, no, no, an hour maybe. I don't know.

13 It was a normal course of things, it was not a lengthy lunch,

14 no.

<{5 Q Did General Singlaub's name come up during

18 the course of this luncheon?

17 A Never, not to the recollection I have.
1g Q Do you have a fairly firm recollection?
ig A Of whether Singlaub's neune came up?

20 Q ^•••

21 A I don't know. I can't swear to it, but I certainly

22 don't remember it coming up.

23 Q By this time you knew at least who General Singlaub

24 «•»'

25 A Oh, I knew who Singlaub was.

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Q So It would not h«v« b«*n on* of th« unfamiliar
naiMS Ilka 1^^^^^^^^ people who cama up?

A No. No, that la right. If Slnglaub's name came
up, I might have remembered It, yea, oh, yes.

0 Did you know a many by the name of General Secord by
this time?

A No, never did.

Q Since November 1986, he has become —

A He has become a name now that I read out of the paper
X never heard of the man before I read the papers.

Q Do you have a recollection of whether his name
cam* up at this lunch?

A No.

0 I take It you would be less Vlkely to remember that
one?

A Probably.

Q Since you would not have had prior familiarity such
as with the name Slnglaub?

Q Okay.

A Secord wouldn't have meant anything to me.
Q During the course of this lunch, I take it
Colonel North, once again, gave his assessment of the

531

1 dcsparatc itral^hta of th« contraa.

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2 A Y«i. oh» y«i.

3 Q Of th« Nicar«9u«n resiitanc*. th« contras?

4 A Yea, I think th« regular ~

5 Q Did you have any knowledge or senae that the

6 Boland Amendment had recently become effective? Was that

7 something you follows?

8 A I knew nothing about that. We heard talk, but I

9 paid no attention to that.

10 Q It was not your area?

11 A It was not in my area. It meant nothing to me.

12 Q And again, at this time Colonel North is talking to
13'
14 A Yes.

Q It would make sense to me that he is talking to this

16 guy not about blankets but —

A I think I said something to Ollie at the end on the
way out withoutfCj^UB hearing, something about you
sure all thia ia legal that you are doing, Ollie? He said,
oh, yea. everything ia legal. I aaid'that ia all.

Q I take it you have a clear recollection that
colonel - you indicated you were not abaolutely sure, but I
am aure you had a clear recollection that Colonel North
wanted arma for contraa either througK|mm)or —

A Aa 1 aay, I don't know how, but he clearly expressed

■F.2 ". =; :", "i*'^

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the view that the contrae heeded ermi, no question about that.
But he talked about — he put it in auch a broad sense,
everybody needed arms, you know what I mean, so did all the
rest of them dotm there. I mean it was this kind of a thing.
So that is why I have to be a little careful about how I say
this because I do want to say that that is the way he did it.
But certainly, obviously, I had the impression that the idea
was arms to be provided somehow for the benefit of the
contras.

Q Either by —

How it was done, I didn't have the vaguest idea.

Either by selling directly to the contras or selling
who provided them?

Or to^^^^^^Hor whatever ^ I don't know.

them t

533

IVJI — RTBXTXXZJ'l^

Q So as you ar« leaving you had this conversation
with Colonel North, you asked hi0>—

A Z sort of did it in passing. Z said, you sure
everything is legal here now, Ollie. He said, oh, he did.

Q Anything more?

A That was all. I took off and I think he and
^may have talked longer, or they may have
walked on, I don't know.

Q Did you ever discuss this event with Mr. McFarlane?

A No.

Q Or anyone else?

A NO.

Q Or anyone in the State Department?

A NO.

Q Or anyone else?

A No.

MR. BGGZfSTOHi Steve, do you have anything?

EXAMINATION
BY MR. BERRY t

Q One question. Where there any other issues discusse<

534

1 I «t that mettlng such as terrorism or counttr-terrorlsa, anti-

terrorism policy b«twe«n the U.S.(

A Zt Is possible. It might have been. But I can't
remember that. They talked about — they sort of went over a
lot of things. As I say, I didn't pay that much attention

0 It is your clear impression that the main purpose
of the meeting was to discuss the need for equipment and/or
supplies for the centres?

A Oh, sure. No question in my view.
MR. BERRY: ThanJc you.
THE WITNESS: As I remember it.

EXAMINATION
BY MX. SMILJAMICB:
0 Ha* this meeting ever mentioned to Bud McFarlane
as far as you can recall?

A Not as far as I —
Q By you?

A Not by me. My assumption %rould be surely it
must have been mentioned by Ollie. My assumption was they wen
pushing together on this thing, and so was everybody else for
that matter. I had no reason to think otherwise.

535

0 I undtrstand.-' " -' ■- •' * ■;-' -.." i -' '
A 1 did not think oth«rwiM.
Q I just meant you personally.
A NO. 1 didn't.

MR. SMIWANICH: That is all.
EXAMINATION
' BY MR. EGGLESTON:
Q Let's go back to —

A Back tefl^^^ thing and Ollie's -- I think what
he may have put down there. I a« sure I probably told him I
was seeing H he may have put that down that 1 was.

Q Actually, though, hi. calendar is maintained not by
himself but that is the handwriting of his secretary.

A He could have said, though, that I was seeing him.
Then I told him later that I had seen him and gave him the
number and then I don't know what J.. »i9ht have done with it.
But that i. Possibl.. I « i«.t trying to suggest how it coulc

have been.

Q Okay. I «« "*<»y *<» *•'' y°" **^'*''

A Fine.

Q 1 take it this 1. substantially in the summer of

1986. by that tim. you -r. h.re. i. that right 7

A Yes. I «•• here.

0 0k.y. «,, don't you t.ll ™ «i»t h.pp.n«l.

» «U. twr. I. not ».cn to ..,. «. ^t th. =.bl..

536

that gives you th« rundown of it. I discu«««d it with
Secretary Shultz on the plana going t

and I don't know how the
decision had been made, but apparently a decision had been
made to request ■mUmmimH to $10
for assistance to the contras. It was told, the Secretary
told me this, and I made some question about possibly saying
something to^^^^H^^Bwhen we met him. I said I thought that
would be wrong.

I thought you had to kind to talk to other people
around him, that you just can't talk to him directly like
that. So anyway, that was given up, the idea of doing that.

So as the cables indicate, this is how we did it
another way, by having the Ambassador »peak and Elliot
Abrams went to London. That was that.

Q You are on the plane betwee
how did the subject come up?

A The Secretary talked to me about it. He raised it.

Q Nhat did he tell you? Just as best you can
recall, what did he say?

A He said he was thinking of making an approach
to iHHjjjj^HHUHHjjH^^I^^IHJ^^IBand see whethei
could provide $10 million to the contras for humanitaiian
assistance and Z said I didn't think it was a good idea for
him to do it. That is all. Z thought it was not right.

i'.'i ti -f. "ty 'a k» I K< K

537

1 I mean, it was not th« way to handle it. That ought to b«

2 dona through other channels. It is not for him to do it.

3 Q Because the Secretary of State shouldn't be
* directly asking for money from a foreign government?

5 A That is exactly right. So that was the way it was.

6 Q I take it prior to this time that you had no

7 knowledge that the Secretary of State was going to raise this

8 issue or wanted to raise this issue?

9 A No, I had no knowledge of it.

10 Q Did he tell you anything more about where the idea

11 came from?

12 A No, he did not.

13 Q Did you know whether Mr. McFarlane had any

14 involvement in this?

15 A I had no idea. Of course, it was not McFarlane,

16 Poindexter.

17 Q Poindexter, yes, sorry.

18 A I had always assumed, though, you have to remember,

19 just as I did on the other, I assumed that was not an

20 individual account. This was the account of a government

21 and these decisions were made by McFarlane and Shultz and

22 Weinberger and maybe I was wrong in my assumption, but that

23 was my assumption. My assumption would be on something

24 like this we are talking about a situation decision that was

25 taken by Shultx, Poindexter, so on, Weinberger.

pjj y '^ ^ - ^ ^iLPifcCL

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0 Right.

A And I had no raaion to question that. No reason.

0 It was your assumption that Shultz didn't get
this idea all by himself setting on the plane?

A I couldn't believe that, no, I didn't think so at
all.

Q Was thtere any discussion with Mr. Shults or.
Secretary Shultz about where the 10 million figure came from?

A NO.

Q It is a larger figure than —

A Pretty substantial figure, but I have no — of

Q Was it your understanding this was going to be a
request of — maybe this is tough in tikis area •". of him
personally or of is government?

A Well, it doesn't matter .,||
So.

Doesn't make any difference.
So 10 million from him %rauld be

Q
A
0
A

Q Did you during the course of this talk to Shultz
about the prior solicitations?
A No.
0 No?

NO.

" td*i'&M)kt'i'

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539

Q Did you mvt talk about that with Mr. Shulti?

A NO.

3 Q I don't want to go through a lot of detail about

4 how tho dacialon waa actually mada, but wara thara othar

5 paople participatin? in thia convaraation?
Q A Charlia Hill.

- Q Charlia Hill waa participating?

A Yas.

Q Did ha alao agraa with you that you ahould not
go to ^^^^^fhdiractly?

A Charlia didn't aay much, but Shultx agreed.
Aa aoon aa ha thought about it, ha agreed.

Q Who waa it who decided that the beat way would be
to go through the Aabaaaador or whatever?

A Oh, I think we talked about it, thought that was
the only way to go about it. That aay have been my
auggeation. I don't know. I eaid you got to - we talked
about it. it •••aed the way to go. I don't know that anybody
a. on. peraon. it wa. aort of a -- ju.t that i. the way to do

it.

0 Maybo ainca wa are in a depoaition we can get this

down for th. record, you ahould de.cribe -- I know you have

don. it befor. - but d.acrib. how th. alt.mativ. way wa.

designed.

A Which alternative way?

540

1 0 To ua« th« Amb«ss«dor and if you could just

2 d««crlb« what actually than cndad up happanlng?

3 A What actually happened was that wa got tha
^ Ambassador comf^^^^^^^^H^and meat there.

S Q This is Ambassador --

^ A I^Ktb ^'^ ^* c*i»* "id ^ talked with him about what

7 the Secretary was interested in and he said, well, the way to

^ handle this would be for ma to quietly talk to the

9 flH^IB*^^' to ^^BB himself, and so that is the way it

10 happened. That is what he did and then the arrangement was

11 made that Elliot Abrams meet with this aid,.
■2 Q vrhat was the ai^^'s nana?

A ^^^^^^^H^^^^^^H And he met him in

14 London. I don't know what happened, i don't know again

15 except they got the money, I guess. But I don't know what

16 happened to tha money. -

17 Q That is a good question.

18 - A X have no idea about that.

19 Q You don't know where the money is?

20 A I know nothing about that money.

21 Q You don't hava tha money?

22 A All I know is I haven't got it.

23 MR. SMILJANXCBt Does anyone hare have the money?

24 MR. EGGLESTONi We can at least eliminate who is

25 here; right?

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2S

541

BY MX. EGGLESTONi
0 H«v« you b««n -- I -ould "•"»• th«t ther« would be
■ooM discussion then between the government ^^m^m
HHand our government about where the money Is or
that it had been received or had not been received. Have
you participated in that?

A The only thing I know about that is in the cables.
I haven't participcated in any discussion. I have no idea.
Ail I know i. what the cables say. I know nothing more.

Q All right. Oo you know as of August of the summer
of 1986 that the money was about to be r.-upped for the
contras, another hundred million —
A From the Congress?
Q From the Congress, yes.
A I r-i the papers. Other than that, I didn't know

anything about it. -

Q There was no discussion with Kr. Shultx about
Why we are doing this. Congress is allocating the money.
A if yott mean did I do that, no, I did not.
Q you didn't have any discussion with the Secretary
.bout the wisdo- of this «.rt of solicitation.
X MO, X didn't.
Q Just the mechanics of it.
A That is .xactly all. A. far as I knew the

^ .- I MV. I assume the decision was

decision was made and as I say, i ""^ ^

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542

r "■ ' ~ ■""»■,'- 1

! : . , . . .. •; . ^i d)

m«d« by th« top p«opl« In th« govarnBicnt.

Q Did h« —
A And it w«f.

0 Did h« tail you who had b«en involved in the
decision?

A No.

MR. EGGLESTONi I don't have anything else on this.

EXAMINATION
BY MR. BERRY t
Q I just %fonder. How did you Icnow that Abrams met
vith I^^^^^Hl Be met sometime later.
^2 A I don't know whether he met with|^^^^HHor not.

13 Because we had arranged it in the cables that went bade and

14 forth.

15 Q At the time you were therein the —

16 A No. They were back her*.

17 Q You case back here and then arranged it then?

18 .. A Yes.

19' 0 So you were just aware of one meeting with Elliot?

20 A Yes. t

21 0 Clearly because of cable traffic?

22 A Yes, you know, those things, my name, I think, is

23 in those cafl^s. After all, I am the guy who coanunicates

24 with our anbassadors in Asia.

28 0 1 wonder if you had talked to Elliot about that.

543

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^-«rvyx i^u'

A Oh, w«ll, only in th« f*ct of him going to London

to ^^^^sim^^Hi

Q You briefed Elliot before he went to London?
A NO. No, 1 didn't brief him. He was talking to
them. There was nothing to brief in a sense. He was the one
who was going to make the case. He knew all about it. I
didn't know anything about that.

And since I can't make a case for or against them,
other than I support the Administration policy, but I
didn't know the ins and outs of it.

Q I just wonder if you briefed Elliot about the

tter?
A If I remember correctly, I don't think I briefed
hi». I think we had a - w. have the s* sheets on key official
in governments around the world. I think there was such a
Sheet which he looked at as I remember. We gave it to him.
we have that on everybody in our region. These are put out
by the agency. But they just give you a general statement
about who these people «.. I think there was one on
I know there was one on ^^^^H

something.

Q But that i. the only contact you. had with Elliot

about this?

A Yes, that Is correct.

544

UNC

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'JL t-^i

EXAMINATION
BY MR. SMILJANICH:
I have no question

but there was one

question I forgot to ask you about

series of events. Yovfiiad started off by saying that you

had gone back and looked at your calendar on November 28,

1964. Could we see exactly what is in your calendar for that

day?

A Yes. you can. That is no problen. You see my
difficulty was that I have another meeting witr
at the Cosmos Club, and that is the one I thought may have
been — what is the date of that? November 287

Q November 28.

A mev^^^^^^^^^H occasionally

August what?

Q November 28.

A November 28. Excuse me.

Q 1984.

A Let's see if I have the right calendar. Here it is.
This, by the way, is one calendar, I was keeping two
because I kept one at the university. This is the one that
has the indication right here. I obviously had a luncheon
with^^^^^^^^^H then you see what I have %rritten here.

^' TOP GCORET

545

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15 <

Th«n Z put Cosmos up her*. So Z think that is —
■•• thst?

Q Right.

A That is what I have h«r«. I was not sure about
that because you see it looks confusing. You understand the
confusion.

Q Thank you.

A Fine. That is fine.
EXAMINATION
BY MK. EGGLESTONi

Q I only have one other area to ask about and I just
want to ask a couple questions about things that may have
come up during the course of that meeting with
It lunch at the Cosmos Club.

A All right.

Q Do you "' all — I understand you are not sort of
involved in thi», but you are sitting here. Do you recall
conversatiofn about Canada coodng up during the course
of that meeting, an arms deal through Xanada 7

A No.

Q Anything like that?

A NO.

Q Do you think —

I don't recall that.

546

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iJljVii/AVi-l X

Ml right.

I can't .wear it didn't, but I don't recall it.
YOU don't racall it. That i» what I wa. going to
ask you. Do you hava a firm racollaction?

A NO. I don't. I don't hava a firm recollection.
A. I .ay. the meeting wa. .ort o£ diffu.e a. far as I could
determine. It didn't hold my attention. I didn't listen
and. a. I say. I do believe I took off in the middle of the
dinner, or lunch, rather, and went to the bathroom. But it
wa. a very diffu.e type of thing.

1 have given you what I think they talked about
baaically. But I don't recall anything about Canada, no.
Q YOU don't have any recollection that some of the

A I don't know. I have no indication of that. A. far
e. I know, I have no recollection o£ that.

Q There i. a man who .ometime. aa.ociates with
I Canada, I think hi. nam. i. Wittenberg or Wittenstein. I
would hat. to .ay for .ure which - did that nam. come up?
A HO. I don't remember any name, of any kind. no.
Q DO you recall any .pecific di.cu..ion of Calero.

Adolf o Calero coming up?

A calero'. name may well have been mentioned. A.
0111. talked about the whole .ituation. I suppo.e.he mentioned

547

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ntMi of p«opl«, but X don't r«»««ib«r •pacifically, in
oth«r words, that wouldn't turprlM »• if Cal.ro' • naiM had

com* up.

Q You knaw who Calero waa?

A I knew who ha waa. 1 hava read about him in tha
nawapapars.

A That waa raiaad with ma laittima. I do not
r«i-mbar that. I don't racall that Kind of a di.cu.aion.
But. a,ai«, a. I -y. I wa.n't thar. all th. tima. I don't
think - and again, it i. po.aibla. I-aaauma. you know, that
that probably wa.n't th. la.t -tin, b.tw.«. Olli. and th.
Gan.ral. I don't know whath.r that i. right or not. but I
aaaum. th.y -y hav. gon. - whan I l.ft, I l.«t. th.y
.u„g around. Thay war. moving off in aaparata dir.ctiona. but
for all X know thay -y hav. talkad anothar 15. 20 minut...

^ f •* 1

548

l»i/lU>i^AVXJ

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X don't know.

0 You didn't )c*«p track of th« dcalln?* th«t 011i«
waa having withN

A 'No, oh, no.

Q I hava asked you earllar if you knew who
General Slnglaub waa and you Indicated you did. Did his name
come up at all in connection with any of these operations as
someone who had been out there?

A Only in the sense, as Z mentioned, thati
as Z recall, stated, as I thought about it,*
mentioned that he had been ^^^^^^^ But otherwise, no. Not
to me. I don't recall 01 lie ever mentioning him to me, or
any of the others.

But they didn't — remember,.! didn't talk to them.
Z never talked to any of them, except ^^H^initially, at all.
for inatance, ten minutes, Z mean that was it.

it was with Ollie and he was doing all the

talking.

I never said ttro words. They were talking and Z
just don't recall names at that tiaa^.

Q Okay. Z don't think Z have anything further, althot.
Z will take a odnute and maybe we can take a brief break and
Z can look over my notes.

MX. SMZLJANZCHi Yes, let's take alittle break.
MR. BGGLESTONi Zs that all right? So we can take

—^

549

i; -Tfj^-'WttrVftin^ Vou-^lwit it for us tc

1 a look at our notes; -Tfi«''nstr VnM^ Vou'-*'*^t is for us to b«

2 back.

3 THE WITNESS: All right. That is all right. Ask

4 what you want to ask. So let's take a break

5 (Recess.)

6 MR. EGGLESTON: Back on the record

7 THE WITNESS: I am very pleased to do anything I
8
9 MR. EGGLESTON: Let me close out the record. We

10 thank you for cooperating with us today, Mr. Sigur. We don't

11 have any further questions and we appreciate your talking with

12 us.

13 THE WITNESS: Thank you. That is all right

14 (Whereupon, at 3:40 p.m. the deposition was

15 adjourned.)
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" l!lWR3S*I»fift'

550

551

ONCLASSIRED *^j'!^

1
2

3 COKNO— / OF — ^ .COWES

5 DEPOSITION OF

6 MAJ. CHRISTOPHER SIMPSON

8 Monday, June 1, 1987

10 United states Senate,

11 Select Committee on Secret Military

12 Assistance to Iran and the

13 Nicaraguan Opposition,

14 Washington, D.c.

15 The deposition of MAJ. CHRISTOPHER SIMPSON was

16 convened, pursuant to notice, at 9:20 a.m.. Ninth Floor,

17 Hart Senate Office Building, the witness being first duly

18 sworn by JANE W. BEACH, a Notary Public in and for the

19 District of Columbia, and the proceedings being taken

20 down by Stenomask by Jane w. Beach and transcribed under

21 her direction.
22

DNCUSStflEO

C»PY NO -iJibf L — COPIED

""^^ u,^er pfo»Wons of LO. 123S6

- by D. Sirko, National Security Council

552

iiMFJEO

3 APPEARANCES :

4 On behalf of the Senate Select Committee:

5 JOHN SAXON, Esquire

6 United States Senate Select Committee

7 on Secret Military Assistance to Iran

8 and the Nicaraguan Opposition

9 901 Hart Senate Office Building

10 Washington, D.C. 20510

11 On behalf of the House Select Committee:

12 ROGER KREUZER, Esquire

13 On behalf of the United States Army:

14 CHARLES LAWSON, Esquire

15 COL. JOHN WALLACE
16

Hfity^ro

553

Mumm

1 CONTENTS

4 Examination by Counsel on Behalf of

5 Senate Select House Select

6 Deposition of:

7 CHRISTOPHER SIMPSON

8 By Mr. Saxon 4

9 By Mr . Kreuzer 26

10 By Mr. Saxon 29

ICilSSffl

554

iwsra

2 PROCEEDINGS

3 Whereupon,

4 NAJ. CHRISTOPHER SIMPSON

5 was called as a witness by the Senate and House Select

6 Committees and, having been first duly sworn by the Notary

7 Public, was examined and testified as follows:

8 EXAMINATION ON BEHALF OF THE SENATE SELECT COMMITTEE

9 BY MR. SAXON:

10 Q Would you state your name for the record, please,

11 sir?

12 A Christopher Simpson.

13 Q What is your occupation?

14 A I am a Finance and Accounting Officer in the

15 United States Army.

16 Q What is your rank?

17 A Major.

18 Q And what is your current assignment?

19 A I am the Finance and Accounting Officer for

20 Fitzsimons Medical Center in Denver, Colorado.

21 Q When did you assume that position?

22 A Late June, '86.

23 Q And what were you doing prior to that position?

24 A I was working on the Army Staff in the Office of
2 5 the Deputy Chief of

iM*S»0

PaftUty OwiMMMl/Rcleaaed on -^^^^ -^ -' ''^•^^
umler provWont of E.O. 12356
kr D. SMo, NaikMMl SKurlty Council

555

Q And what were the dates of that assignment?

A Roughly 1 September '86 — or, excuse me,
1 September '83 to late June, '86.

Q And in that assignment, what were your particular
duties? I believe you told us earlier that you had both
white world and black world functions.

A Yes, sir, that is correct.

Q Let me say for the record, by the way, that when I
make reference to the fact that you have told us something
earlier, I am having in mind that on April 14th you met with
several members of the House and Senate staffs, in fact for
about six hours, and we had a lengthy discussion about these
matters. So when I say you have told us before, that is
what I have reference to for subsequent readers of this
record.

Now I believe you told us that you had both white
world and black world missions in your desk log assignment.

A Yes, sir, that is correct.

556

Q And you were in this position when the initial TOW
missile request came for the Army to transfer TOW missiles
to the CIA. Is that correct?

A Yes, sir, that is correct.

Q And you were more or less the principal individual
for executing on that request at the Department of the Army?
Is that a correct assessment?

A Yes, sir, that is a correct assessment.

Q What I would like to do, Ma j . Simpson, rather than
immediately having you walk us through the chronology,
because your involvement was so extensive and this
discussion is going to be rather lengthy, let me ask you a
number of specific questions from the outset. Then, after
we cover some of this ground, we can go back in and pick up
the story in chronological order.

First, when did you first become aware that the
destination for the TOW missiles was Iran?

557

UNCUSSIRED

1 A When did I first become aware of it?

2 Q Yes.

3 A When I opened up The Washington Post newspaper in

4 the City of Denver in late November 1986.

5 Q And is that likewise true for the HAWK repair

6 parts?

7 A Yes, sir, that is true.

8 Q So you did not know that they were destined for

9 Iran at the time you were working on these requirements?

10 A No, sir, I did not.

11 Q If you had known they were destined for Iran,

12 would that have affected your executing on the requirement,

13 or what would have been your response?

14 A Sir, at the very least, besides notifying the Army

15 leadership for which I worked, my good friend, a legal

16 counsel in the Office of the Army General Counsel, Tom

17 Taylor, I would have gone to him and sought his advice on

18 that matter.

19 In the three years that I had worked there, I had

20 be«n instructed both by the leadership and by my predecessor

21 boss, now retired, never to do anything illegal. And I

22 would have felt that we were doing something illegal.

23 Q Your predecessor boss, now retired, that would be

24 Col. Stevens?

25 A Col. Jeff Stevens, yes, sir.

558

UNCUSSIFIfO

1 Q What would have been your assessment in January

2 1986 if someone asked you what our policy was toward the

3 shipment of arms to Iran?

4 A Sir, I would have flat said that I was pretty

5 intimately familiar with it. with the U.S. Customs folks

6 that I had worked on covert operations with, there were any

7 number of papers in my office where they were asking for our

8 assistance in covert operations — in fact, a snare, deadbeats

9 that were trying to export arms to Iran — so I knew in fact

10 it was a violation of the Arms Export Control Act.

11 That Act was frequently cited by the Customs

12 Service, that so-and-so was a suspect, and that they were

13 asking for our assistance, and the suspect was accused of

14 violating U.S. Code umpty-ump which was in fact the Arms

15 Export Control Act. So I was very familiar with what that

16 means in terms of with respect to Iran.

17 Q That, however, would be with regard to

18 individuals.

19 A That's true. But I would have attached the same

20 interpretation to any government dealings with Iran.

21 Q Was the legality of meeting the TOW requirement or

22 the HAWK repair part requirement raised, to your knowledge?
2 3 A Well, the legality of supporting of it absolutely
24 was raised. Again, I went to Tom Taylor, a very competent

2 5 counsel in the Office of the General Counsel of the Army,

ONCDISSIFIED

559

UNCMSSIFIED

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and we did that early on.

There were also extensive legal reviews on the
support request by a number of other Army principals,
including the Deputy Staff Judge Advocate and the Army
General Counsel herself.

Q That would be Susan Crawford?

A Yes, sir.

Q I believe you told us previously that you were
fairly familia^itj^n^perated frequently through the

Army' J|^^m|^^H ^

A Yes, sir, that is correct.

Q And am I correct in stating that the!

■is the formalized system and set of procedures
■pA
employed within D^ f or handling sensitive transfers from

the Army to other agencies, principally the CIA?

A Sir, you're correct, with one small correction.

loperates down to the Army through the

Department of Defense.

Q Is it safe to say that the TOV^ransfe^n^J^
HAWK repair parts transfer by passed j

A Yes, sir, that is correct; they did bypass thi"

Q They did not go through it?

A No, sir, they did not.

Q Are you aware of any other transfers during the

560

NCUSSIFIEO

1 time you were at DCSLG from D^A to the CIA which bypassed

2 ^^^^^^^

3 A Sir, there were no other transfers after September

bypassed^^^^^^^^^^^^^^^^Hxhere were

5 any large number of new controls implemented after September

6 of 1984 to keep the Secretary of the Army informed on our

7 support to the Agency. Prior to that time, there were small

8 requests. But even prior to September of 1984, there was no

9 support of anything that killed people that did not get the

10 Secretary of the Army's written approval. So this was a

11 major departure from our prior procedures, even before the

12 extensive controls that were implemented in September of

13 1984.

14 Q Let me ask a question about pricing. As far as

15 you know, was there any pressure put on you to low-ball on

16 the price for either the TOWs or the HAWK repair parts? By

17 which, I mean pressure to come up with a low price?

18 A No, sir, there was no pressure at all.

19 Q Are you aware of pressure put on anyone else

20 within the Department of the Army to come up with a low

21 price?

22 A Not within the Department of the Army, sir.

23 Q Are you aware of pressure that was put on people
2 4 outside the Department of the Army who were involved with
25 this transaction to come up with a low price?

UNCmSIFIED

561

sf^i'iiej Ji II 11

1 A Sir, I'm aware of no pressure on a low price, but

2 there certainly were external pressures on the Agency with

3 regard to changing the price once we had initially

4 established a figure to start from.

5 Q Okay. We will get into that a little later.. Who

6 first came up with the price on the TOWs of $3,169?

7 A Succinctly put, sir, that price originated from

8 DCSLG, Department of Army.

9 Q By going to the AMDF, the Army Master Data File

10 and looking up the price for a —

11 A —Particular stock number that matched the

12 terminology for a basic TOW, which is what the Agency was

13 requesting at the time.

14 Q And approximately when was that price arrived at?

15 A Sometime in late January, 1986.

16 Q So within the first, more or less the first week,

17 or the first two weeks of meeting this requirement?

18 A Yes, sir, that is true.

19 Q When did you first learn that there was a price in

20 th« AMDF for a basic TOW with safety modification, a MOIC, a

21 M-O-I-C, of $8,435?

22 A Sir, that was a discussion that I learned about
2 3 some weeks after we got started. It emanated from the

24 project manager TOW's office at Missile Command

25 Headquarters.

UmSSIFIED

562

MSSIflfO

Q Col. Lincoln?

A It was either he, or George Williams, I forget
now; one of the two of the principals.

Q Did you ever see that figure of $8,435 on any of
the transfer documents or shipping documents which came from
Anniston Army Depot?

A No, sir, I did not. I am aware, at this late
date, though, that such a price was on some documents.

Q And if I'm asking you to speculate here, just say
so, but do you know what system, or process, or mechanism
the people at Anniston Army Depot utilized which enabled
them to come up with that figure?

A No, sir, I do not.

Q At any point in working the TOW and HAWK
requirements, were you aware that they were being done
pursuant to a Presidential Finding?

A Yes, sir, I was aware of that.

Q At what point did you become aware?

A Sir, I can't precisely tell you today without
referring to notes and papers, but ^^^^^^^^^1 the CIA
Agency Action Officer and myself discussed that early on in
support of the mission — in the early days is all I can tell
you, back in January of 1986.

Q ^^^^^^^^^^^^^

r there at the CIA.

m\m

563

uussm

1 Q I believe you told us that there was fairly

2 extensive discussion within Dj^A about the issue of

3 congressional notification?

4 A Yes, sir, there was extensive discussion at many

5 levels of the Army leadership.

6 Q At what stage did that issue arise?

7 A Sir, that stage arose when I went to seek advice

8 and counsel from Mr. Tom Taylor on the legality of support

9 of the mission in its entirety, and within a few hours of

10 when I went to see him he brought that back down to my

11 office, a small copy of the Congressional Intelligence

12 Authorization Act of 1986 and said, Chris, you need to be

13 aware of this. He said, this impacts on this particular

14 mission.

15 Q In what way?

16 A In that he said that congressional notification is

17 required, he said, on any shipment of arms over a million

18 dollars. He said, this is clearly— and we had determined

19 the price within the first couple days, so by the time we

20 had gone to see Tom the price already was well in excess of

21 several millions of dollars, and he said this clearly meets

22 that requirement.

23 He offered to do the notification for us to

24 establish points of contact in the Congress. At that point,

25 I went to see General Russo for guidance and counsel. He

UltASSIHED

564

UNCLitSSIFIED

1 brought Tom Taylor down to discuss it extensively with him.

2 Within a short number of days, Tom Taylor brought back to us

3 a paper that Mrs. Crawford, the Army General Counsel, had

4 given to the Secretary of the Army to advise him that she

5 felt that notification was a legal requirement.

6 Gen. Russo then asked me to take that paper down

7 to Ma j . Gen. Sutter, who at the time was the Army's Deputy

8 Principal Lawyer, the Assistant Staff Judge Advocate

9 General. After Gen. Sutter looked at it, I also was asked

10 to take it to Gen. Brown, the Director of the Army Staff.

11 And later I know that it also went to Gen. Cavezza, the Aid

12 to the Secretary of the Army.

13 I also know that a meeting later was held with

14 Gen. Russo and other Army principals where they discussed

15 notification at length at the most senior levels of the

16 Army.

17 Later I was involved at the end of the

18 notification issue when it was surfaced to Gen. Powell, at

19 the time. Ma j . Gen. Powell, the Aid to the Secretary of

20 Defanse. In a memorandum that I was asked to type, which I

21 kept Gen. Russo's handwritten notes from the meeting of his

22 meeting with Gen. Powell that day. Gen. Powell was asking
2 3 Gen. Russo to reassure the Secretary of the Army that

24 notification was being handled at the level higher than an

2 5 outside-of-Department-of-Army, and that it had been

rosifiED

565

yimssiRED

1 addressed, and it was taken care of.

2 Q Major, if I understand your testimony, you are

3 saying then that from the earliest days the issue of

4 congressional notification was flagged; that Secretary Marsh

5 weighed in on it; Gen, Brown, the Director of the Army

6 Staff, Gen. Russo, the Army General Counsel, and that on at

7 least one, if not more, occasions one or more of these

8 individuals communicated directly to Gen. Collin Powell,

9 Secretary Weinberger's Military Assistant, to see that the

10 issue of congressional notification was identified and

11 examined by appropriate authorities above the D^ level. Is

12 that correct?

13 A Yes, sir, that is correct. In fact, there was

14 great concern at the Army level about the notification

15 issue. In addition, I took a copy of the Intelligence

16 Authorization Act to my counterpart in the Agency, and he

17 also from his end reassured me that the Agency was executing

18 its legal responsibilities with respect to notification.

19 MR. KREUZER: You said something about Gen. Powell

20 was asking Gen. Russo to reassure the Secretary of Defense

21 that —

22 THE WITNESS: No, the Secretary of Army.

23 MR. KREUZER: Or the Secretary of Army, that

24 notification was being made?

25 THE WITNESS: Was being handled, sir.

(INMSSIFIEO

566

UmSSIFIEI

1 MR. KREUZER: Was being handled.

2 THE WITNESS: That the issue had been addressed,

3 and was being taken care of.

4 MR. KREUZER: I see. And so did he in fact, did

5 Gen. Powell in fact do that, do you know?

6 THE WITNESS: Sir, the memo that I typed for Gen.

7 Russo, which was from his handwritten notes, made no mention

8 of the fact that DoD was going to do a notification; only

9 that Gen. Powell for the SECDEF wanted Mr. Marsh reassured

10 that the issue had been addressed at DoD level.

11 BY MR. SAXON: (Resuming)

12 Q To your knowledge, Maj . Simpson, were you ever

13 told, or was anyone at the DA level every told, that this

14 issue had been handled in a manner of informing the

15 Congress, that it resulted in--

16 A Was I ever told by anybody at the DA level?

17 Q Yes.

18 A No, sir, I was not.

19 Q Were you ever made aware of the requirement on the

20 TOW nlssiles being handled in order to replenish Israeli TOW

21 stocks which had gone to Iran in late '85?

22 A No, sir, I was not. I became aware of that from

23 reading the public papers much after November of '86.

24 Q Did you yourself ever at any time deal with the

25 Israelis?

lllSySSSiFIED

567

UNCUSSIFIED

1 A No, sir, I did not myself deal with them. I do

2 know that my boss-now-retired j'eff Stevens had had occasion

3 on a number of different matters to deal with the Israeli

4 Government .

5 Q But as far as you know, matters unrelated to those

6 before this Committee?

7 A Yes, sir.

8 Q Did you ever have any contact on these matters

9 with Noel Koch, K-o-c-h?

10 A No, sir. That name isn't familiar to me.

11 Q Did you ever have any dealings on these matters

12 with Glen Rudd, the Deputy Director of the Defense Security

13 Agency?

14 A No, sir, I did not.

15 Q Did you ever have any dealings on these matters

16 with Dr. Henry Gafney, the Director of Planning for DSAA?

17 A No, sir, I did not.

18 Q Are you aware that under foreign military sales,

19 FNS sales, the cheapest the United States had ever sold a

20 basic TOW missile for was $6800?

21 A No, sir, I wasn't aware of the specific details,

22 but I am generally familiar with FMS pricing policy.

23 Q Let me ask you a question or two about the checks

24 which the Army received from the CIA as reimbursement, or
2 5 payment for these weapons systems which were transferred.

UimSSIFIED

568

mssiriED

1 What do you recall the amounts being for those

2 checks?

3 A Sir, as I recall, the sum of money was about $5.5

4 million. As I recall, I received from the

5 H^^^^^^^^^^^^^^H CIA, them

6 came out to $999,999.

7 Q Did you ever ask why the checks were cut in that

8 amount?

9 A Yes, because again I was keeping in mind the

10 advice I had had from the earliest days, to keep the

11 paperwork to an absolute minimum. I was concerned about the

12 audit trail of six checks, as opposed to one. Anc
^^^^^^^^^^^^^^^^^^^^^^^^^^H^^^^^^^^^^^B explained to

14 me that there were computer problems and that they could

15 only program a check up to a certain amount.

16 Q Did he explain that there might be a reason for

17 them only to program a check up to one penny short of a

18 million dollars —

19 A No, sir, they didn't.

2 0 Q — because if they exceeded a million, they would

21 hav« to notify Congress?

22 A No, sir, they did not.

23 Q Did —

24 A Again, if I had heard that I would have been

25 especially sensitive to it, because the checks were coming

ttSSIFIES

569

uNQiSSIFIEI

in at the end of the mission where we had had so much
concern about notification at the beginning. Had that issue
surfaced in the end, I would have again immediately gotten
bac)c to General Counsel and asked for some guidance and
reaction. ^^^^^^^^^^^^^^^^^^^^

Oic^^^^^^^^^^^^^^^^^^^Bat the ever
you that he had been at the White House for a meeting on
January 18th with Admiral Poindexter, Col. North, Clair
George, and Stanley Sporkin, the General Counsel of the CIA?

A Sir, he never told me that, although
and I have spoken before, and I knew he was dealing with
principals over there, but I did not know any of the names.

Q Did he ever tell you that his point of contact at
the White House or the NSC was Col. Oliver North?

A No, sir, he did "ot^^^^^^^^^

Q Were you aware that^^^^^^^Vtold Gen. Russo
that the price of $6000 per TOW, which apparently Gen. Russo
had provided him as a working figure early on, was too high?

A Was I ever aware that he told him that it was too
high? No, sir, I wasn't.

Q Were you aware that Col. North told|
that $6000 per TOW was too much?

A No, sir, I did not. I do feel there's an answer I
could provide here that might clarify matters for you.

Sure.

NtASSIFIED

570

OmSSIHED

1 A I do believe that when Gen. Register, the Army

2 Deputy Chief of Staff for Logistics, talked to me the first

3 day that he had the thought that the price would be higher

4 than it turned out to be for a basic TOW. And the numbers

5 that he had provided to me, which was around $4000 ^ once we

6 had communicated that lower price to the Agency in the early

7 days of the mission, then the number went up very quickly in

8 terms of the number of missiles that they were asking for.

9 And I think that has a bearing here.

10 Q Okay. Did Gen. Russo ever tell you that

11 ^^^^^^^had told him to find the oldest TOWs that existed in

12 the Army warehouses?

13 A Sir, I'm not sure about that. That might be true.

14 I'd have to go back. I've kept an awful lot of detailed

15 notes on this mission. I'd have to go back and study those

16 to provide you a better answer.

17 Q Did^^^^^^^^Hever tell you that Col. North had

18 checked with the Marines on TOW prices?

19 A No, sir, he did not.

20 Q Did^^^^^^^^Hever tell you that

21 told him to avoid the

22 A Yes, sir, he did. That was very much a concern,

23 again, from the first time I spoke toj
2 4 ^^^^^^^1 because he knev^^^^^^^^^^Band I from prior
25 extensive dealings with each other and knew well what the

571

ONGUSSiriED

rules were on our support to the Agency. That was almost
the first five minutes of our discussion the first day we
met, was not to deal with any of the people in the]

And it was specifically addressed by name as the

A Yes. ^^^^^^^^^Kknev well what that was.

Q Do you have any knowledge that Gen. Russo dropped
the price from $6000 per TOW to $3400 per TOW on the first
day that^^^^^^^^^lwas involved because of a call Gen.
Russo received froo

A Sir, I would have to say that has to be absolutely
untrue, because in fact Gen. Russo was out of town when this
mission got started, and I already had provided the basic
price of $3169 to Gen. Register. Gen. Russo didn't pick up
the mission for several days, and it wasn't until a couple
of weeks after that that I surfaced to him from the bottom
up the fact that we needed to add $300 more to the price,
bringing it up to about $3469.

Q The requirement for that was due to the safety
modifications?

A Yes, which were surfaced to me from MICOM
headquarters. So it was absolutely a matter of the field
surfacing to the Army leadership, and not vice versa.

Q Let me ask a question or two about the readiness

y^rassiFiEO

572

UmSSiFIED

impact of meeting the TOW requirement — excuse me, the HAWK
repair parts requirement.

A Okay, we're on HAWKs, now, sir?

Q Yes. Did you ever tell^^^^^^^^^Vof your

concern about the readiness impact of providing all 234
items requested for the HAWK repair parts?

A Yes, sir, I did.

Q And what was his response?

A His response was that that was what they needed.
But, sir, that again is not such a simple matter. Gen.
Russo and I personally chopped the list down. Using the
vernacular, that means we reduced the number of critical
items that would have an impact on Army readiness.

I would point out, and it is of concern, that the
principal number of items that the Agency was asking for on
HAWKs were of an older model called Pre-Phase II PIP
configured radars.

Q If I understand what you're saying, you and Gen.
Russo were concerned about the readiness impact on certain
parts, and sought to not meet the requirement as to a
certain number of parts. Is that correct?

limSSIflED

573

mmmB

1 A Yes, sir, that is correct .

2 Q And in fact did^^^^^^^^^Bre instate those parts

3 and say in essence that you would have to provide them

4 anyway?

5 A Sir, there was give-and-take on that. The numbers

6 that I had chopped down for him on some that he came back,

7 there was a critical question that Gen. Russo asked me to

8 ask^^^^^^^^H early on. Early on, the question that I was

9 to ask him was, were they just buying these items to put on

10 the shelf? Or were they buying these parts to replace

11 damaged equipment? ^^^^^

12 The answer that came back from^^^^^^^Hseveral

13 days later was that they were buying the parts to replace

14 damaged equipment. And that, then, affected the Army

15 assessment of whether or not to support. Even after that,

16 though — and you and I had extensive discussions on this in

17 April — the technicians assisting us in assessing Army

18 capability to support this project felt that some of the

19 numbers were wrong. That is, that some of the parts that

20 thay had requested would have been supporting about, as I
recall, ^^^^^^^^^Hj^H and some the repair parts,

22 of the technicians felt, would have supported a number far

2 3 in excess of that.

24 So again, it was a complex matter, and there was

2 5 give-and-take on the list as we reduced the items they were

iiNebissifiEo

574

ymssra

1 asking for, sometimes just because they didn't make sense.

2 And other items were we could not afford to give them all

3 that they asked for.

4 Q But while there was some give-and-take, were there

5 any items that you and Gen. Russo would have preferred not

6 to transfer to the CIA which^^^^^^^^H insisted you

7 transfer?

8 A Yes, sir, there were a small number of items that

9 we in fact gave them slightly more than we had originally

10 chopped the list down on.

11 Q And how many would you say that would be?

12 A To my best recollection, and again I've got my

13 notes on it, there were probably about 6 items out of that

14 whole list of 234 that we gave them more than we intended,

15 after reviewing the criticality of the items.

16 Q And those would have been items which you would

17 have preferred not to surrender due to the readiness impact?

18 A Yes, sir. And it might not necessarily have been

19 the readiness impact on U.S. forces, but the readiness

2 0 impact on some of our FMS customers where they owned these

21 older systems and might be coming in. I would also mention,

2 2 I think it is important here, that we offered, and it was a

23 more sensible alternative offered by the U.S. Army Missile

2 4 Command, to in fact bring the^^^^^^^l systems back to the

25 Army's overhaul facility. We felt that it would not only be

575

UNUSIFIEO

cheaper, but much easier to resupply and maintain in the
future to modernize the ^^^^^^Hsy stems to something we
called Post-Phase II PIP configured, which would then have
made it easier for them to both maintain and operate the
systems in the future.

They would have also had a better capability, a
state-of-the-art capability.

Q We will talk about that in more detail later. For
now, that was not done, even though the Army suggested it?

That was not done. The offer was not — yes, sir.
The offer was not taken up by the Agency.
Was declined. The offer was declined by the

A
Agency .

Q Were you ever told by anyone that the decision to
delete the radars, the tw<^^^^^^^^Hradars , was made by
the White House?

A Was I ever told the decision was made by the White
House? No, sir. That was a twisted and sordid affair, as
you may recall from our prior testimony. I had done a great
deal of work for^^^^^^^^f in finding out the
availability. As you recall, I had told you that

It turned out they were property of the Iranian
Government, and that I had told^^^^^^^H that both the
Treasury, the White House, and the State Department, as well

liNttffism

576

UNttASSro

1 as the Defense Department, and a number of agencies, all

2 needed to be involved in the. release of that equipment. He

3 was very concerned that I had gone and done this work,

4 although he had vigorously told me to go ahead and ask to

5 procure them.

In was boss, ^^^^^^^^^^^^^H that

7 called my boss. Gen. Russo, to complain about the fact that

8 we were "making noises" so to speak, about the items, and

9 asked us to cease and desist immediately.

10 And of course, hypocritically, they turned around

11 on that just a couple of weeks later and asked us to go and

12 inspect them for readiness capability; and in fact provided

13 funds to do that. But I never did hear an answer — a short

14 question with a long answer — I never heard the White House

15 mentioned as the activity that asked us to back off.

16 Q And just for the record, you were never told that

17 Col. North himself made the decision to delete the radars?

18 A No, sir, I did not.

19 Q All right. That completes what I would want to

20 run through as sort of some overview, or sort of bottom-line

21 questions.

22 Roger, do you have anything in that category

23 before we start to another one?

24 EXAMINATION ON BEHALF OF THE HOUSE SELECT COMMITTEE

25 BY MR. KREUZER:

UmSSIFIED

577

imim

1 Q The discussions that you had with Gen. Russo, you

2 went to the AMDF. You found the first price of $3169, and

3 you conveyed that information to Gen. Russo?

4 A Yes, sir, that is correct.

5 Q And he said, okay, in essence?

6 A Well, by the time Gen. Russo got involved, we had

7 already established the price and given it to Gen. Register,

8 his boss. Gen. Russo was picking up the mission several

9 days later. That was already something that had already —
that event had already passed by the time Gen. Russo took

So then later there was a question of the MOIC

Yes, sir, several weeks later.

And you had to go back with it to Russo the next

Yes, sir.

— since he had taken over, and say we have to

19 adjust this price to $3469 —

20 A Yes, sir.

21 Q — because of the MOIC. And what did he say then?

22 A Gen. Russo wanted to know what in the hell a MOIC

23 was. Neither one of us knew what it was at the time. We

24 had to have a detailed technical explanation provided of

25 exactly what this small electrical apparatus was going to

tcj

that ev

over.

device?

time—

578

uNCUssra

1 do.

2 Q So ultimately once the discussions took place and

3 he learned about what the MOIC was, did he say, okay, in

4 essence, this is all right?

5 A Well, of course he did. The objective was that we

6 had to go back to the Agency to tell them that additional

7 funding was required which, as you may recall, caused a lot

8 of consternation at the time.

9 Q And that was not the only time, I guess.

10 Q That's true. That wasn't the only time that we

11 changed the price on them, based again on information being

12 fed from the field up to the leadership.

13 Q Now was there some — were you aware of some

14 discussion between the people at, let's see, who was it,

15 Col. Lincoln or Mr. Chris Leachman, and Gen. Russo about

16 $3469 being too low a price? Are you aware of any

17 discussions they had with them, or arguments?

18 A Sir, I don't recall that Col. Lincoln or Chris

19 Leachman ever talked with Gen. Russo. They did speak with

20 me, and one of the generals at Missile Command did speak

21 with Gen. Russo; but the discussions on pricing that Mr.

22 Leachman and Col. Lincoln had were always with me. I don't

23 think either one of those, Chris Leachman or Col. Lincoln

24 ever talked to Gen. Russo about prices, not to my knowledge.

25 Q Are you ^WATf of the discussions that Col. Russo

aware ot tne discussions

ilMSIFIED

579

1 did have with Lincoln and Leachman's boss, the General?

2 A Sir, I was generally aware I think that Gen. Russo

3 generally had a discussion with the Deputy Commanding

4 General at Missile Command, and I am generally aware of what

5 the outcome of that discussion was.

6 The outcome was that there had been a lot of

7 technical discussions on the whys and wherefores of

8 different years and different prices of different shipments,

9 and Gen. Russo said he did not want the bureaucracy to run

10 the risk of damaging the mission, and he was going to leave

11 the prices as set.

12 Q So did you hear of what price the General at

13 Missile Command was advancing to Gen. Russo? Did you have

14 any knowledge of that?

15 A I know it was one of the higher prices, but not

16 specifically the details.

17 Q And Gen. Russo said in essence, it is $3469?

18 A Roger. By that time we had already gone through

19 several other iterations on changings in price, and Army

20 ancillary costs. I think Gen. Russo was a little bit

21 concerned about changing truth, and just kind of said let's

22 leave it be and let's go with what we have now.

23 MR. KREUZER: Okay. Thank you.

24 EXAMINATION ON BEHALF OF THE SENATE SELECT COMMITTEE — Resumed

25 BY MR. SAXON: (Resuming)

liNCHtSSIflEO

580

UimSSIFIED

Q All right. Major, I think it may be helpful from
the outset to have you elaborate a bit on something I asked
you about previously, which we will spend a good of time
discussing, and that is the

Off the record a minute.

[Discussion off the record.]

BY MR. SAXON: (Resuming)
Q Back on the record.

A Sir, just briefly, and if I get too elaborative,
just cut me off, not knowing where you need the —

the result of Secretary of
the Army's concerns that there were a large number of
classified programs and activities going on in the Army over
which he did not have full visibility. Some of these
concerns were accentuated by the fact that there had been a
Department of Justice investigation of some ODCSOP, Office
of the Deputy Chief of Staff for Operations.

Q Would that have included what we have come to know
as "Yellow Fruit"?

A Yes, sir. As a result of the outcome of the

'" T

581

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

UNWSIFIEO

investigation, several Army colonels were received in
ODCSOP, and the Secretary did not feel he had as full
visibility as he should over some of the details of the
classified operations.

A Ves, sir, that is ^^^^^^^^^^
Q You said it was "the"^^^^^^^^^^B for

handling transfers to the CIA, and requests from the CIA.

In your judgment, would it have been the only, or the
Ifor such requests':
A Sir, it was the exclusive office!

Q Were you there at the time it was created?

A Yes, sir, I was.

Q And you had dealt with that office?

JNCiraFIED

582

2
3

ONMSIHED

Extensively, on a daily basis for almost
Iby the time we got to September — or by the time
we got, excuse me, to January 1986.

Q And to make sure I understand what you testified
to earlier this morning, I believe you told us in the
interview in April that there were a few instances in which
transfers to other agencies would go outside of the

A Yes, sir. As a matter of fact, with respect to my
white world job, I think I want to separate my dealings with
the ^^^^^^^^^^^^^H exclusively concerned my black world
job. And although I worked on other covert activities,
there were other established DoO and DA channels for
receiving these support requests, and I in no way interfaced

the^^^^^^^^^^^^^^^^^^^^^^fon those

Q So it is perhaps possible that transfers to other
agencies went^^^^^^^^^H-excuse me, that transfers went
f roa OA to other agencies without going^^^^^^^^^^H But as
far as you know, no black world or covert transfers took
place to the CIA outside^^^^^^l Is that correct?

A No, sir.

I think it is also important — I would like to
elaborate just very shortly — to say that on the requests

OmSSIFIED

583

where we did provide Army material to other agenciesi

they were always done
with Army General Counsel's written support, and always with
a written approval of the Secretary of the Army.

Q And you did not follow those procedures in this
case? Is that correct?

A No, sir. The procedures involved in supporting
the TOW missiles and the HAWK parts went outside all of
these established channels.

Q And at the time the TOW requirement was imposed on
who was the hea^^^^^^^^^^^^^^^^^^^^^^^H

Sir,^^^^^^^^^^^^^^^^^^^^^^^^^p'as the
head.

Q Roughly, when did he depart?

A Sir, to the best of my knowledge, he left just
about the time I did in the early spring of 1986.
Q And who was his replacement?

A gentleman, I can't remember his name.
Would that be I
Yes, sir.

If you would, start at the beginning of your
involvement with and knowledge of the TOW missile
requirement, wherever that would have been, in January. And
if you would, simply walk us through what happened, how you
found out, who called you, and who said what, what you did,

mmmii

584

UNCIASSIFIEO

1 et cetera.

2 A Sir, my involvement began on a Saturday morning in

3 late January. I believe it was around the 20th of January.

4 Col. Lapasota, who was the Executive Officer to the Army

5 Deputy Chief of Staff for Logistics, Gen. Register —

6 Q And that would be Gen. Benjamin Register?

7 A Gen. Benjamin Register, yes, sir.

8 Q And spell Lapasota.

9 A L-a-p-a-s-o-t-a. He is now Gen. Lapasota. He is

10 now Chief of Planning and Operations in the Office of the

11 Deputy Chief of Staff for Logistics.

12 Q Excuse me. You said Colonel?

13 A Col. Lapasota, then, is now Gen. Lapasota, and he

14 is now the Chief of Plans and Operations for ODCSLG.

15 Q And he called you?

16 A He called me at the behest of Gen. Register. He

17 said Gen. Register is in his office, and he would like you

18 to leave your house immediately and come directly into the

19 office to see him.

2 0 I immediately went into the office. I got there

21 about 30 minutes later. Col. Lapasota did not know why Gen.

22 Register wanted to see me, except that the DCSLG office was
2 3 activated, and Col. Lapasota was acting as the support

24 officer, which was his normal role.

25 I went in to see Gen. Register with the doors

UNWSIFIED

585

mmm

Q Let me ask, for the record, while there are a lot
of things you told us in April were unusual about the TOW
and HAWK missile request, I believe you also told us that it
was not unusual for you as an Army Major to be dealing with
the Deputy Chief of Staff for Logistics, or other senior
people at DCSLG. Is that correct?

A Yes, sir, that is correct. I dealt with Gen.
Russo daily, and I saw Gen. Register frequently.

Q Okay. Continue.

A Gen. Register said that that morning|
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H Gen.
told both of us that that morning he had received from Gen.
Thurmond —

Q And that would be Gen. Maxwell Thurmond?

A Maxwell Thurmond, the Army Vice Chief of Staff,
had received from him a priority requirement to assess Army
capability to provide about 4000 TOWs to the CIA on very
short notice. At the time, it was within just a couple of
days.

The requirement was so urgent that Col. Lapasota,
although he knew nothing about my mission, had been
instructed to have a plane on standby down at the field down
at Ft. Belvoir to take me any place I might need to go in

UNKASSIFIED

586

8—

1 support of this mission. There was some thought on Saturday

2 I might need to go down to Army Missile Command Headquarters

3 to expedite support of the mission.

4 Q And where is Army Missile Support?

5 A That is at Redstone Arsenal, Alabama.

6 Q And that is also referred to as MICOM?

7 A Yes, sir. MICOM is the common abbreviation for

8 Missile Command.

9 Q All right. Continue.

10 A The requirement, as Gen. Register conveyed it to

11 me, was again to provide about 4000 basic vanilla TOWs. A

12 vanilla TOW, for the record, is an old model of an Army

13 tactically operated optical wire-guided missile, which is a

14 missile at that time that had a range of about 3000 meters

15 and was kind of a "tank killer" as it were.

16 Gen. Russo said, I am going to wait in my office.

17 He says, do you have any points of contact at MICOM? I had

18 said, yes, I knew Col. Lincoln from a previous mission that

19 I had worked on, who was the Chief of the Army's TOW Project

20 Management Office, the office responsible for dealing with

21 contractors' design and development of missiles.

22 I called Col. Lincoln. I got in touch with him on

23 Saturday.

24 Q Now before you go into your discussion with Col.
2 5 Lincoln, let me back you up a moment and ask you what the

.5'

587

u^WmHUVIIS II.U 37

1 specific guidance was that you received from Gen. Register

2 in terms of how this transaction should be handled, who

3 should you tell, what kind of notes, et cetera?

4 A The guidance I got from Gen. Register was one that

5 the entire DoD staff that was involved in this was a very

6 tiny handful of people; that it was as sensitive a mission

7 as I had ever worked on; that I was to keep paperwork to an

8 absolute minimum; and to keep the number of people I

9 involved to an absolute minimum necessary to accomplish the

10 mission.

11 Q Were you asked if in fact it would be possible for

12 you to deal with a single individual at Redstone?

13 AX believe that I was, sir. And although we

14 thought that was initially capable, it turned out not to be

15 true as time went on.

16 Q And were you shown any reguests in writing from

17 the CIA, on CIA letterhead, as you would have normally had

18 for one of your reguests?

19 A No, sir. As a matter of fact. Gen. Register said

20 a major departure from our normal procedure would be that

21 thare would be no staffing paperwork on this mission.

22 Rather, that I would deal with the same principals that I

2 3 deal with to get a mission approved; but I would do all of

24 it by verbal coordination.

25 Q Did Gen. Register say from whom Gen. Thurmond got

!'WTOFI£0

588

1 this requirement?

2 A Not at that time, sir; but I understood clearly

3 later on that it came dovm from the Office of the Secretary

4 of Defense.

5 Q At what point do you think you would have been

6 told that?

7 A Oh, about the time we started to discuss the

8 pricing issue. I was very well aware, as we started to

9 discuss the pricing issue, that those decisions and

10 requirements were coming from the Office of the Secretary of

11 Defense, and I knew that Gen. Powell was acting for Mr.

12 Weinberger.

13 Q Correct me if I approach something like putting

14 words in your mouth, but is it safe to say that while this

15 request was unusual in many regards, that from the outset

16 there was no doubt about its legitimacy or that it was

17 passed on by appropriate Amy individuals at the highest

18 levels?

19 A Sir, there was never any doubt in my mind. I was

20 dealing with people who I had heard their names frequently,

21 and the people within the Army I was dealing with I had

22 dealt with extensively for 2-1/2 years by this time, so
2 3 there were no surprises, no new faces, and I certainly

24 attached legitimacy to the mission because of that.

25 Q Tell us then about your conversation that first

i^'"*^^siFii^n

589

- .« 39

1 day with Col. James Lincoln at MICOM.

2 A Sir, Col. Lincoln, who I will just refer to after

3 this as the TOW Project Manager, the TOW PM, said that that

4 was an unusual thing, because here I have Gen. Register the

5 DCSLG of the Army waiting in his office for me to see

6 whether or not we can provide about 4000 TOWs on very short

7 notice, as early as within three days. For the record, this

8 was a very, very short window to make such a major

9 assessment of support capability.

10 Col. Lincoln said he would go into his office. He

11 said he would have to do this strictly from a records'

12 review; that it was almost impossible otherwise than that to

13 assess it in such a short time. But he went into his

14 office. I provided to him a stock number for the basic

15 vanilla TOW.

16 Q And where did you get that stock number?

17 A I got that from a fellow in the DSLG missile

18 office who was working with me that Saturday.

19 Q That would be a civilian named John Hill?

20 A Yes, sir, that is correct. And it was from that

21 stock number that we determined the price, which we also

22 gave to Col. Lincoln.

23 Q I believe you told us that Mr. Hill was called in

24 by Gen. Register to do a check of existing inventories to

25 see whether —

590

,ji.iii ,n I. 40

1 A Worldwide,

2 Q — the need could be met.

3 A Yes, sir.

4 Q And to provide you with specific stock numbers for

5 the basic vanilla TOWs. Is that correct?

6 A Yes, sir, that is correct.

7 Q But that is more or less the extent of Mr. Hill's

8 involvement?

9 A That was his only involvement with me, sir, after

10 that.

11 Q Okay. So you gave the stock number for the

12 vanilla TOW to Col. Lincoln?

13 A Yes, sir; that is correct.

14 Q And then what happened?

15 A He called me back sometime after lunch, I would

16 suspect before 2:00 o'clock as I recall, and said, Chris, it

17 looks like we can do that. He said, I want to get my

18 regular folks in here on Monday morning, he said, but he

19 said, it looks like we can do it. He said, it looks like

20 I'v« got enough stocks.

21 He had told me, at that time, that he thought they

22 were down at Anniston Army Depot, a depot several hours
2 3 distant from Anniston.

24 Q Anniston Army Depot is within Alabama, and

25 Redstone —

mSSIFIED

591

IWSinED

1 [Simultaneous question and answer.]

2 A — in Alabama, and Anniston Army Depot, for the

3 record, belongs to Missile Command Headquarters. It is one

4 of their subordinate activities.

5 I went up and Gen. Register, who was still waiting

6 in his office — it was my understanding he was waiting to

7 give the answer back to the Army leadership at that time.

8 Q At that point when Col. Lincoln first got back to

9 you to say he thought the requirement could be met, you did

10 not know that the shipments were to be split into the three

11 orders? Is that correct?

12 A That is absolutely correct, sir.

13 Q Nor did you have any reason at that stage to know

14 that a safety modification, or MOIC, would be needed? Is

15 that correct?

16 A No, sir.

17 Q Okay. Continue.

18 A Once I had told Gen. Register what Col. Lincoln

19 had advised me concerning, Gen. Register gave me a beeper

20 and asked me to stay very close hold the rest of the

21 weekend. He had Col. Lapasota have the plane on standby,

22 which also was to remain throughout the weekend, and asked

23 me, should I leave the house at any time, to let him know.

24 There were no more events that weekend. We picked

25 up the mission on Monday when two things happened, both on

592

fflissra

1 Monday morning. One was that al

2 ^^^^^^^^^^^■from the CIA called me on the phone and asked

3 me if he could come over and visit me in my office.

4 Q Had you ever had any dealings with him prior?

5 A Yes, sir. I had had some extensive dealings with

6 ^^^^^^^^^^■^■^ ^^^

7 I knew him well. He came over to see me, told me he was the

8 Agency action officer for the project on which 1 had been

9 briefed on the weekend, and he knew all of the details

10 concerning what I had worked for Gen. Register on on

11 Saturday. And again, based on my normal dealings with the

12 Agency, I then fully understood that he was the main

13 participant.

14 Q At that point, did this operation have a code

15 name, or a nickname?

16 A It didn't then, but I developed one very shortly

17 for it.

18 Q

19 A

20 Q

21 that neuBe?

22 A To tell you the truth, I looked out the window and

23 it was snowing the day we gave it the name. I wanted

24 something very innocuous that would not attract attention.

25 Q For the record, when we get to the HAWK repair

And that was what?

I developed it and called it "Project Snowball."

Was there any particular reason why you gave it

mbL

593

yUSSIFIED

1 part condition, did you also provide that its name?

2 A Yes, sir, I did.

3 Q What was that name?

4 A I provided the project a name called "Crocus."

5 Q And why did you name it that?

6 A Because at the time when I looked out the window,

7 there were crocuses blooming. I know that's very amusing,

8 but —

9 Q Okay, to go back to your discussions with
^^^^^^H continue.

11 A Sir, that morning^^^^^^^Hat that time alerted

12 me that the first shipment could be as early as just a few

13 days from that, and asked me that day to work on weights and

14 cubes for a variety of different aircraft, including a

15 Boeing Commercial 707, an Air Force C-140, and a number of

16 other civilian and military aircraft. There were 2ibout five

17 all together, as I recall.

18 The environment became very dynamic at that point.

19 He also wanted me to determine the capability of the runway

20 down at Anniston to support these different type of

21 aircraft. That particular factor we learned very guickly

22 could not support some of the bigger aircraft, and within a

23 very short time we had decided that if we were going to do

24 any outloading of missiles, we would do it out of the

25 Redstone Airfield, which was big enough to acconunodate all

y?MSinED

594

.WSSIFJED

1 of the different variety of aircraft.

2 Q All right. We will be told by you later, I

3 assume, that these missiles were not actually airlifted, but

4 in fact went by truck. But we so understand now, in the

5 beginning the plan was for them to be airlifted out of

6 Anniston Army Depot? Is that correct?

7 A Yes, sir, that is correct.

8 Q Then you promptly ascertained that, given the type

9 of aircraft the CIA contemplated, that would not be

10 possible?

11 A Not for all of the types of aircraft; that is

12 correct, sir.

13 Q And so at a later date, and perhaps we will get

14 into it further in the chronology, but at a later date the

15 decision was made that these would be transported to

16 Redstone from which the airlift would take place?

17 A Yes, sir; that is correct. Also, on my first day

18 with^^^^^^^^^l because we had dealt before on issues and

19 he always knew that we priced things for him, he wanted to
2 0 know what it was going to cost.

21 He and I compared notes that morning on what —

22 since this was the first time that I had received a support
2 3 request without a piece of paper specifically discussing the

24 details of it--I was just doing the basic thing that any

25 good action officer would do, which was comparing the stock

595

1 number that I had and the terminology out of the Army Master

2 Data File, and I said^^^^^|is this what you want? I said,

3 this is what I got from the DCSLG on Saturday morning, and

4 we ascertained that same day that, yes, that was what he

5 wanted .

6 So after that particular discussion was done, I

7 have now called back Col. Lincoln to work on weights and

8 cubes and airfield problems. Gen. Russo calls me up and

9 said, Chris, he said, I've been talking to Gen. Register

10 about you. He said, why don't you tell me all about this

11 project.

12 Q This is Gen. Vincent Russo?

13 A Yes, sir, the Army Assistant Deputy Chief of Staff

14 for Logistics.

15 Q And at this point, this is his first involvement?

16 Is that right?

17 A Yes, sir. He had been away on a TDY trip when

18 this mission got started. For the record, it was normally

19 he that I dealt with day to day on these kinds of missions.
2 0 Q And it was in his absence that you —

21 A Dealt with Gen. Register, which was the exception

22 rather than the rule.

2 3 Q Okay, what did you and Gen. Russo discuss?

24 A Gen. Russo gave me a dump of what Gen. Register

2 5 had told him had transpired from Gen. Register's end. Then

wssife

596

1 Gen. Register says, Chris, could you tell me about what you

2 have been working on? So I brought him up to date both on

3 my discussions that weekend with Col. Lincoln, as well as my

4 discussions earlier that same morning witf

5 I told Gen. Russo then that I had unresolved

6 business to go work on. That is, to get the weights and

7 cubes done on these various types of aircraft. Also, that

8 particular morning I got back to^^^^^^^^^Hand asked him

9 if he wanted me to work with the FAA in getting them

10 clearances for a contract airplane, and he declined that

11 offer that morning, but said he would reserve the right to

12 do that later.

13 Q Before we go further, let me clarify for the

14 record or make clear what would have been your normal

15 process in handling a requirement such as this. Now we've

16 established that it did not go throughthe^^^^^^^^^^^^
^^^^^H If it gone the^^^^^^^^^^^^^PVwho

18 were some of the individuals you would have dealt with?

19 A Off the record?

20 MR. SAXON: Yes.

21 [Discussion off the record.]

22 BY MR. SAXON: (Resuming)

23 Q Okai

24 A
25

697

I had several principals — I will keep their names
office the record — that I dealt with. They had a singular
requirement that any request to us had to be in writing.
One of their principals signed that request. It then went

^^^^^^^^^1 would then call me to come down
and get them.

^^^^^^^^^^^^^^^^^Hwould even us a request
he felt that it wasn't proper for the Army to support, but
he was exercising oversight for the Secretary of the Army in
that regard. Briefly, before I got a request that killed
people to work on, those requests had gone up to be
personally reviewed by the Vice Chief of Staff of the Army,
and the Vice Chief of Staff of the Army would give!

^guidance as to whether the memo was to go to the

p^mmw

598

mmiB

1 Secretary for signature, which required also Chief of Staff

2 review, or whether it was to go to the Under Secretary and

3 required a Vice Chief of Staff review.

4 ^^^^^^^^That was called a "concept approval." So when

5 ^^^^^^^^^^^Hgave me an agency request to work on that

6 involved things that killed people, it already had something

7 called an Army Leadership Concept Approval.

8 Once I had worked on a request of this particular

9 sort, a whole host of folks got involved routinely in

10 helping me staff the action. One of them was the Office of

11 the Director, Military Support, DCSOP, and that is

12 abbreviated DOMS, D-O-M-S. That again stands for the office

13 of the Director, Military Support.

14 They looked at this issue for readiness. There

15 were a number of cleared individuals down there that looked

16 at this for its impact on readiness. If they would not give

17 us a chop, that would normally stop the action right there.

18 Q Did that ever happen?

19 A There had been a number of times where readiness

20 became an issue and affected how we supported an Army

21 mission. Generally, I might add, that via classified

22 telephone, if the Agency was contemplating anything big,

2 3 that they felt, and they were pretty well experts at this,

24 if they felt there was a tendency for a mission to have an

25 impact on Army readiness, they would scope it out by

599

UNCbtSSIFIED

3
4
5

6
7
8
9

classified telephone first.

Q So you're saying before a written request came
over, someone in I guess IDSB would call you, say here's
what we're thinking about, and in fact you would not only
tell them what the preliminary action was that you had, but
you would check stock numbers, availability, price, et
cetera?

A Yes, sir, that was routine. Normally, if we told
them it was going to have a negative impact on Army
readiness, they would back off. That would normally at the
Agency site kill an action before it ever got here.

600

ONClASSiFIED

G^Q^ SO

iNGUSSlFlED

^y -', T! V

601

And were these for routine kinds of items? Or did
you ever use this process to handle fairly sensitive
matters, or sensitive transfers?

mi^ssTO

602

So I guess the answer
is, yes, that we had used this sort of system on other
occasions to support urgent requirements. Some of those
enforcement agencies have frequently asked us for same-day
support. So we were used to not being bureaucratic. We
were used to being fast and efficient.

Q In the roughly three years previous that you had
spent in this job,^^^^^^^^^Hbeen asked by the CIA for a
TOW missile, prior to this requirement?

A No, sir, 1

Q Now I interrupted. If you would, go back and
continue where you were in the chronology. You had talked
witt^^^^^^^^^Hon Monday morning. Vou had spoken to Gen.
Russo. Where are we?

A Yes, sir. We diffused slightly when you asked me
to go through for the record our normal staffing procedure.
We are now back to the Monday morning after the second day.
I'm now working with MICOM in getting details on
weights and cubes ready foi^^^^^^^^^Bat the Agency. I'm
keeping Gen. Russo informed on a daily basis. The
requirement that Monday was to support an upload of 1000
missiles as early as the coming Saturday, the 29th of
January.

That changed at the last minute. Although we had
MAC support — this is, for the record, Military Airlift

yitUSSIfiED

603

Mmmis

1 Command, abbreviated MAC, we had MAC support lined up for

2 that Saturday and we dropped it at the last minute, causing

3 some consternation.

4 Q Now when you first got with Mr. Hill and got the

5 stock number and model numbers, you looked up the price

6 yourself, I believe, in the Army Master Data File. Is that

7 correct?

8 A As a matter of fact, that's correct.

9 Q For the record, now, why don't you take a moment

10 and tell us about the MOF, what is it, how is it used, et

11 cetera.

12 A Briefly, the Army Master Data File is a compendium

13 updated monthly with prices and national stock numbers of

14 items in the Army's wholesale supply inventory.

15 Q Without the pictures, is it more or less the

16 Army's Sears Roebuck Catalog?

17 A That is correct. It is a numerical catalog

18 published on microfilm, and it comes out monthly. Briefly,

19 it gives you the formal nomenclature of an item in

20 abbreviated form, as well as some other codes to assist you

21 in ordering the item.

22 It is important, for the record, that the price

23 that is published in the MDF is normally not a price that

24 the manufacturer charges the Army, but it's something called

25 a "standard price" which some Army folks at the Army catalog

yNmSiFIED

604

mSSIHED

1 data activity sit down and come up with this price based on

2 last contract price, and other Army ancillary costs. So it

3 is designed to allow the Amy supply system to operate not

4 at a loss.

5 Q And does it list items according to their last

6 seven numbers of the item's full stock number?

7 A Yes. That is important. The items that are in

8 there are listed based on a catalog number assigned. I

9 think in regards it has interest to this particular hearing

10 and committee. The items that are in there are not in any

11 particular sequence. That is, you won't find eight

12 different models of one item together in catalog data

13 activity because as years and months go by, the next

14 available number off the register is assigned to the next

15 new item.

16 Q They are then in chronological sequence? Is that

17 correct?

18 A Well, you wouldn't be able to tell that, though,

19 because when you look up an item, when you look up the last

20 Sevan numbers, the NINN, it's called the NINN portion of the

21 stock number, N-I-N-N, the National Inventory Identification

22 Number, and that is the only number that is in sequence.

23 Q Just so this is clear. If I wanted to look up a

24 TOW missile, I don't have in my hand a catalog, a hard-copy

25 catalog and turn to page 12 and find 5, or 8, or 10 TOW

WltffilFlEO

605

mmim

1 missiles listed according to the variation of the TOW and

2 out to the side, the price? Is that correct?

3 A That is correct, sir.

4 Q Now that data is in the MDF, but it's on

5 microfiche. Is that correct?

6 A That is correct, sir.

7 Q And it's about 40 pages on microfiche?

8 A That is also correct, 40 microfiche pages with

9 literally thousands of individual pages of detail on the

10 MDF.

11 Q And as you've indicated, they're not listed in

12 sequence according to groupings of the items, so I would

13 have to go throughout the many pages of the MDF to find all

14 of the TOW missiles listed and all of their prices. Is that

15 correct?

16 A Yes, sir. But it would be literally impossible

17 for you to do that without knowing the stock numbers. You

18 would have to know the last seven digits of the stock

19 numbers of other TOW missile models to find then.

20 Q Now how would someone like Mr. Hill have known to

21 find the last seven digits of a basic TOW, or a 71 Alpha?

22 A Well, to start with, John had some documents that

23 listed a model number and a stock number for a basic vanilla

24 TOW. He also had some stock numbers and models for other,

25 more advanced items, but that wasn't what we were asking

OilTOIFIED

606

iWSinED

1 for.

2 John's only question that Saturday morning was,

3 did I want one that worked, or did I want a training round?

4 Q And what did you say?

5 A John, I said, I want one that works. And he said,

6 you mean you're going to shoot it at something and you want

7 to penetrate something? And I said, that is correct. So he

8 did not then work on a training round for me, which he told

9 me had another, different stock number.

10 That was kind of the scenario that took place as

11 John Hill and I worked out the stock number. We are still

12 only up now to the second day of this event.

13 Q Just for the record, when Hill gave you the stock

14 and model numbers and you looked up the price in the MDF,

15 just so we have this at this point for the record, what was

16 the price as you found it in the MDF for the basic TOW?

17 A It was $3179.

18 Q And as far as you know, until we complicate things

19 further in the chronology, that was the correct price for

20 what you thought was the requirement? That is, it was a

21 basic vanilla TOW?

22 A Yes, sir. Although the MDF does not use the words

23 "basic vanilla TOW." In fact. Guided Attack Missile is the

24 nonabbreviated nomenclature.

25 Q One more background item for the record. You told

UNiASSIFIED

607

lifiASSinED

1 us earlier about

2 A

3 Q Within the CIA, which you have dealt with. I

4 believe you told us in April when we interviewed you that in

5 fact you had been instructed by the CIA only to deal with

6 ^^^^^^V^s that

7 A That is correct, even to the point where they

8 wanted to have a direct call in to the Office of the

9 Director of Logistics, CIA, should one of their agencies or

10 subordinate departments try to get in contact with the Army

11 for support without going through that office.

12 Q Did you ever deviate from their instructions to

13 deal exclusively with!

14 A Yes, as a matter of fact I think it is important

15 for the record that on this particular case of supporting

16 TOW missiles and HAWK parts that at the beginning, in
addition to avoiding the Army^^^^^^^^^^^^^^lfrom the

18 DoD end, I was also asked to avoid dealing with my usual CIA

19 counterparts.

20 This also became urgent later on when I needed

21 some document numbers for some supply requisitions to

22 support some of these parts and pieces, and I was unable to
2 3 get those document numbers from the Agency's Director of

24 Logistics because they did not want lower level people

25 involved in this mission that worked at the Agency.

608

IStASSIRED

1 Q All right. At this point, before going further

2 into the chronology, did you know what the destination of

3 the TOWs was to be?

4 A No, sir, I did not.

5 Q Now you indicated clearly you did not )cnow it was

6 Iran. You knew they were going to the CIA?

7 A Yes, sir, and I —

8 Q Did you know where the CIA was going to have them

9 shipped from Anniston at that point?

10 A No, sir, I did not; although that was a matter of

11 principal concern to me. I was normally responsible for

12 follow-on shipments in many cases for the Agency, and should

13 they have been using a DoD transportation system, then I

14 absolutely needed to know what the point of demarcation was.

15 They told me that they had intended at some point in this

16 project, which I knew early on that they intended to lift

17 these off from a particular post, and that that was going to

18 be done, and the Agency was going to assume management

19 control for this and would not need my assistance, nor would

20 they need support of the DoD transportation system.

21 Q I believe you told us previously that within

22 roughly the first 48 hours you did know that they were going

go ^°^^^^^^^^^| Is
24 A Yes, sir.
2 5 Q And what is|

it&incci

609

Mfmm

A For the record, and this is classified
information, that

^^^^^^^^^^^^^^ That is
classified at the Secret level.

Q I believe you told us — as is in fact this whole
transcript — I believe you told us that you did three things
in those early days in trying to find out what the
destination was. Would you tell us what you did? I have in
mind —

Yes, sir. I can recall I talked, number one, with
who was the Agency Action Officer. He

You asked him where these were going?
Yes, pointblank. I involved myself with him,
because Gen. Register, the Army Deputy Chief of Staff for
Logistics, asked me could I find out where they were going.
^^^^^^^Bsaid he was not able to tell me, but he would
ask^^^^^^^^^^^^^^^^^^^^|answer to me
no, I can't tell you.

Q So initially you asked, yourself, where they were
going; and then later —

A Yes, sir. Then later I was asking for Gen.
Register. That one was pursued up_to_the level of Mr.
sl

HMplsiCQiricn

610

iSi4ssiFe

1 ^^^^^^^^^^^^^^^^^Hboss the Agency for

2 mission.

3 Later one it became more urgent because I wanted

4 to make sure concerning incidents with the FAA, or the

5 Department of Transportation, that I knew where they were

6 headed once they 1«

7 Mr .^^^^^^^^^^^H who was the Agency Action

8 Officer principal on the ground al^^^^^^^^^^Hassured me

9 that they would be out of the U.S. borders within hours, and

10 he was going to assume responsibility. I told him, though,

11 that as in all cases in the past that should an accident

12 happen before that plane got across the boarders, if he did

13 intend to airlift them out o^^^^^^^^^^Hthat I was the

14 guy responsible for dealing with other government

15 departments, so I had a concern right up until the time that

16 ^^^^^^^^^^^Hcalled me back to tell me the shipment was

17 over the U.S. borders and gone.

18 Q And did^^^^^^^^Hever tell you what the

19 destination was going to be once it left?

20 A No. He said he could not do that. He knew I was

21 concerned about it right up to the end.

22 Q And I think the third way you endeavored to find
2 3 out where these were destined was to call!

24 Tell us about that, and tell us who she is.

25 A

611

On this particular matter, I needed some backup in
case something went wrong with the shipment, and I tolc
nonnally^^^^^^^^^Hmilitary traffic management command of
the Army normally would be involved in tracking the shipment
in case anything happened to it. ^^^^^^^^^^B was also
unable to tell me, or could not, would not tell me where the
shipment was going.

Again, Z told^^^^^^^^^^Bkeeping me out of the
picture, that this was very much of a concern for me
because ^^^^^^^^^^Bshould anything happen to it anyplace
within the Continental U.S. borders, that I was quickly
going to have to come up with a story. And I was very
concerned about not having it already in the system, which
we had done at almost all other shipments that moved within
the U.S. borders.

Q Normally the people with whom you dealt, your
points of contact whether for transportation purposes or at
the Agency, they normally did tell you these things?

A They didn't tell me on all shipments leavingl
^^^^^Vwhere they were going, but on any number of very
critical missions I had been involved frequently in putting

NmsiriED

612

»«sm

1 things in the defense transportation system for them. This

2 was one of the most sensitive requests we had ever worked

3 on, and certainly I was more concerned than I would be on

4 shipping toilet paper or some other innocuous type of

5 supply.

6 Q Okay. I think we can return to the chronology

7 then and see where we are. We are on day two. What happens

8 next?

9 A I think that I can move you rapidly forward to the

10 end of the week. We got from^^^^^^^^3the weights and

11 cubes on different types of aircraft. Later that week he

12 told me to be ready to ship that Saturday, the 29th, up to

13 1000 missiles.

14 That involved gathering together some Air Force

15 pallets. He wanted them put on Air Force 463L pallets. For

16 the record, that is a standard Air Force pallet to fit in

17 MAC type aircraft.

18 We gathered that equipment together and hauled it

19 down to Redstone Arsenal. We removed the missiles from

20 Anniston, brought them up under guarded convoy to Redstone.

21 Q At that point you had determined that you needed

22 to use Redstone. Why was Redstone selected?

2 3 A Redstone was picked because of the length of the

24 runway, which was sufficiently large to accommodate any type

25 of aircraft. Even as late as two days before the mission.

613

WWSSIFIE

1 ^^^^^^^^^1 could not tell me what sort of aircraft would

2 come in on the 29th of January of support the mission.

3 Q Now you told us that you laid on a MAC airlift

4 capability.

5 A We laid on a MAC airlift capability. MAC again

6 declined to tell us what type of aircraft, only that they

7 would see sufficiently a goodly number of aircraft brought

8 in there to haul out the thousand missiles.

9 We had also provided to them our weights and cubes

10 on the different sorts of aircraft.

11 Q Now is getting MAC airlift capability something

12 that is easily done?

13 A No, sir. For the record, MAC typically requires

14 for a routine mission two weeks' notice to permit them

15 efficiency of operations and proper scheduling. They can

16 support an emergency crisis mission within 72 hours, and

17 almost nothing can be done unless you give them 48 hours

18 notice. That is simply because they have all their aircraft

19 fully committed, and within the 72-hour time frame they've
2 0 got everything committed even to emergencies.

21 So we did not cancel. I had gone all the way down

22 to Redstone arsenal the afternoon before the 29th of

23 January, and we literally cancelled at the very last minute

24 wher^^^^^^^^fcalled me on the telephone and said, not
2 5 this time; come on back home.

lUSSiFIED

614

1 Q Is that something that took place to the

2 consternation of the MAC folks?

3 A So much to the consternation, that the next time

4 that we needed them, we were unable to get them on short

5 notice.

6 Q They simply said no?

7 A They simply said, hey, guys, give us the proper

8 notice in accordance with the regulations.

9 Q And they viewed their rescheduling for meeting the

10 first requirement as an opportunity cost?

11 A Well, it was a severe opportunity cost. As a

12 matter of fact, because MAC has to account — all of these

13 missions are charged to someone. And a loss of several

14 thousands of dollars, a very large sum of money actually in

15 terms of $30,000 to $60,000, was lost in opportunity cost

16 for MAC because of this shortfall, and because that aircraft

17 again could have been laid on to support another mission.

18 That mission was simply lost. That would be the

19 cost to the Air Force of not being able to support another

20 mission.

21 Q Let's see if we can get you adequately on the

22 ground at Redstone with everyone you need to know. We're
2 3 talking about 1000 missiles, and they were shipped from

24 Anniston Army Depot to Redstone. How did they travel from

25 Anniston?

615

ONCIiSSIFIED

1 A They traveled from Anniston to Redstone by truck

2 convoy.

3 Q Was that commercial truck, or military convoy?

4 A Sir, I don't know at this point. I know that I

5 asked Col. Lincoln to lay all that one. I do know that at

6 my request they had an extra empty truck in case of a

7 breakdown, and all of the convoy was guarded fore and aft.

8 Q So you were on the ground ready for the missiles

9 to go forward?

10 A Well, with some problems. We had a couple

11 problems. One of them was that at the last minute — one of

12 the requirements of Gen. Russo, the Army Assistant Deputy

13 Chief of Staff, had laid on early in the requirement is that

14 although he was very uncomfortable with no paperwork to

15 support the mission request, he wasn't going to "do nothin'"

16 as he said, without seeing some money.

17 Q Is that when he told you, "no tickey, no laundry"?

18 A Right in that time frame. The reason was was that

19 we had had several what I call aborted promises on this

20 business of getting the paperwork over. We had been told at

21 the beginning that the mission was all approved at the

22 highest levels.

unl ike^^^^^^^^^^^^^^V where

24 money came with the support request — that is, the guarantee

2 5 of funds in writing — we didn't have any guarantee of funds.

ONCmiFIED

616

1 It had been a sticking point in the early days of the

2 mission. So —

4 of funds from the agency?

7 the fund sites to be charged. So when this mission aborted,

8 the idea was that over to my office, and one of the

9 counterparts left behind me, was going to come the paperwork

10 before we executed. That didn't happen that afternoon that

11 I was on my way to Redstone. I was already in-air, but the

12 piece of paper was supposed to come over to the Army's

13 office.

14 It didn't come.

15 MR. KREUZER: When you say the papers identified

16 Mn the fund sites which were to be charged?

17 THE WITNESS: Well, what that means is there

18 were — I don't want to go into details; they are highly

19 classified — how the funds were identified were clearly

20 identified on the piece of paper. That is, there was no

21 question in anybody's mind, either at the Army level or the

22 Agency level, what particular pot of funds were to be
2 3 charged.

24 MR. KREUZER: Who provided the fund sites?

25 THE WITH£SSi -.Ihq5Q«,qAP^jj^Hnj41y and typically

617

UNCLASSIFIED

1 out of the Office of the Director of Logistics, CIA. Once

2 again, on this particular request, it was highly unusual. A

3 first, well, not a first, but a rare event.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^K Agency

5 principal, was going to provide us the fund site directly.

6 And that had not happened by the afternoon that I had gone

7 to Redstone to execute the first planned phase of the

8 mission.

9 BY MR. SAXON: (Resuming)

10 Q And how were you informed that the certification

11 of funds was not available, and that the mission should be

12 aborted? ^^^^^^^^^__

A I talked t(^||^|^^^^H But he had a second

14 reason. He told me that the real reason that day that he

15 was aborting the mission was that they could not get follow-
on transportation from^^^^^^^^^B That was the real

17 reason given to me. That proved later on for us to be a

18 sticking point. We were literally after the 29th of

19 January, until we actually physically executed early on

20 Valentine's Day, the 14th of Febru^ . , we were literally

21 delayed a day at a time while we tried to line up the

22 follow-on transportation support.

2 3 Q Were you told that the Agency was having trouble

24 getting the funds because of external problems?

25 A Yes, sii

618

KUSSIFIED

Who told

that?

Q Was he I

A Yes, sir, he was at that time.

Q And what did he tell you?

A He told me that he was having a lot of difficulty
getting these funds. He was very apologetic. He and I — he
is a very professional, capable individual. He had a lot of
consternation himself about how bumpy it was going.

Q Did he tell you where the Agency was getting the
funds, and with whom he was having to deal?

A Well, he told me he was dealing with
also an Agency principal in terms of getting the release of
the money.

Q Did he ot^^^^^^^^^Hever tell you that the White
House was involved in the funding?

A Yes, sir, he did. As a matter of fact, that was
discussed extensively during these periods of delays.

Q Which? Witf

Both ^^^m^^^^^^^^^^^^^^^^^H and
it was simply that the White House was the decision maker on
release of the funding; and that, a 1 though ^^^^^^^^H was
apparently the man going over to deal with the White House
principals, that ' f _ LTJC Ji* " -' 'IC J< 1 11^ - -^ 1-T "-' ^^° ^^^ going

619

ifiiusm

to give^^^^^^^^^^^^Hthe release. Andl

2 had said to me that the minute that^^^^^^^^^B gave him the

3 release of funds, that I would get them. He obviously

4 wanted to be done with this as quickly as possible.

5 Q And between January 18th and February 13th, I

6 think you told us in April that the price changed a couple

7 of times, for some reason. What was the reason?

8 A The price on the missiles changed for a variety of

9 reasons, sir. The first and most important reason was that

10 after the delay on 29 January, the very first reason that

11 the price changed is that we now have a large guard force

12 assembled.

13 My directions to Col. Lincoln were not to leave

14 these weapons unguarded at any time, thinking about the

15 possibility of an accident or civilian mayhem.

16 Q So they were physically on the grounds somewhere

17 at Redstone?

18 A In a secure area, under a detailed guard. Now of

19 course the cost of feeding and housing a guard force and

20 paying them 24 hours a day, all of these folks were under

21 contract labor from Anniston. The salaries and the housing

22 and the feeding, the TDY costs basically, all became my

23 responsibility on the 29th of January.

24 Q And that was unanticipated, because the

25 expectation was that they would lift off.

mmssm

620

<AVC^F/fO

1 A Was that we would drive them up and deliver them

2 on the 29th. So the first time that the price changed was

3 on the ancillary costs that we had earlier quoted. And we

4 quoted a new figure on the ancillary costs.

5 Other events, to try to keep them short, it was

6 about two weeks after I first got involved with Col. Lincoln

7 that George Williams, his deputy, called me up and told me

8 that although they had originally told us, yes, they could

9 support the requirement for about 4000 basic TOWS, that they

10 did not feel that they could supply that many now after

11 actually checking the record and looking at the condition of

12 the items in storage at Anniston. And in fact he told me

13 that they needed to add a MOIC to about 2300 of these

14 missiles.

15 Q All right. Let's take this point in the record to

16 talk a minute about the problem with the basic TOW, the

17 flyback problem, what a MOIC is, et cetera.

18 A Okay. The reason that 2300 of these missiles had

19 to be fitted with a MOIC was just this simple. The Agency
2 0 did not want any items that were not in condition Code A,

21 Alpha. Condition Code A was an Army condition code that

22 basically told anybody that was requisitioning the item or
2 3 using it that it was in brand-new condition and would work

24 as per the manufacturer's specifications.

25 Other condition codes indicated a degraded

HNCttSSra

621

UNMSIFIED

1 condition in materiel, and in the particular case of these

2 2300 missiles George Williams told me they were in Condition

3 Code N. In the case of these Condition Code N missiles,

4 George had explained that these still were brand-new

5 missiles, but what happened over the case of thousands and

6 thousands of firings, that there had been a problem with two

7 or three flybacks.

8 A flyback is a particular case where a young

9 soldier with a guided TOW missile system had fired a TOW

10 missile and it had not gone forward to hit the target, but

11 had in fact come back on the ground where the young soldiers

12 firing the weapon were.

13 Although this had only happened two to three times

14 out of literally a production run of a third-of-a-million

15 missiles, it so concerned the Army, the risk of death or

16 injury to a young Army soldier, that they had taken entire

17 lots of these missiles. They had determined that what had

18 caused the flyback was a faulty electrical circuit on these

19 missiles that rarely, but unpredictably, would fail.

20 The missile ordnance inhibitor circuit was a

21 modification developed by the engineers to prevent the

22 flyback.

23 Q And that's a "MOIC."

24 A And so the Army Missile Command had said that

25 unless this MOIC was applied to certain lot numbers of these

UNCUSSIFIED

622

WUSSIflED

1 missiles, that they had them all classified in Condition

2 Code N, even though they were brand-new and in fact all of

3 them might have fired without any problem at all and gone

4 and hit the target as they should have.

5 Q Who manufactured the basic TOWs that we're talking

6 about?

7 A Hughes Manufacturing Company.

8 Q Was there a point at which they realized that they

9 had this problem with the TOW and took some action with

10 regard to subsequent missiles manufactured?

11 A I want to say for the record that a number of

12 things happened. Number one, my knowledge of what Hughes

13 Manufacturing did with missile and ordnance inhibitor

14 circuits greatly expanded after November '86 when I learned

15 in great detail all that transpired. But even back in the

16 early February time frame, I knew that Hughes also was

17 manufacturing a MOIC. I'll go on later to what they did

18 later on.

19 But Hughes was manufacturing a MOIC, and they were

20 delivering so many a month to Anniston Army Depot to outfit

21 and modify these basic vanilla TOW missiles.

22 Q And the depot in Anniston actually had an assembly

23 line—

24 A Which they periodically ran. They periodically

25 ran this assembly line to outfit the missiles.

UNCbtSSIFIED

623

UNCUSSIHEO

1 Q So they had been doing that prior to Snowball?

2 A Yes, sir, they had, on an intermittent basis.

3 They had about a thousand already on hand outfitted with

4 this MOIC, and the reason was that they frequently engaged

5 in FMS sales of these basic vanilla TOWs, and they were

6 outfitting them with this MOIC before they were selling

7 them.

8 I didn't know all those details, of course, when

9 we talked to Col. Lincoln on 29 January, but by the time we

10 got to two weeks later, George had told me that what made

11 them in Condition Code A was this $300 MOIC. He came up

12 with that price for that item. That's what he needed from

13 me.

14 Our conversation that day went something like

15 this: Needless to say, I was very concerned that we had a

16 delivery schedule set up now. I didn't talk about tha^

17 earlier, but for the record the delivery schedule that

18 ^^^^|had set up with me in the early days of the mission

19 was to take delivery of all of the 4508 missiles within a

20 six-week period, approximately two weeks apart, with the

21 first shipment to be a thousand. That clearly meant to me
2 2 that the other 3 500 were going to be divided at two-week

23 intervals and shipped later.

24 When George Williams called me to tell me that now

25 the delivery dates are in jeopardy that the Department of

624

yNOASSIFIED

1 Army has conunitted itself to, I was concerned. I said,

2 George, can we in fact modify the missiles in time to meet

3 the next deadline in two weeks? He said, yes, we can do

4 that if you will provide more money for ancillary costs and

5 money to pay for the modification.

6 So George and I at that time, I told him I would
go forward to^^^^^^^^^^^^H at the CIA to get more funds.

8 I did do that and, after some difficulty and consternation,
^^^^^^^^^^^^■did swear to me that he would get more

10 funds, and to proceed with the retrofit. Also, Gen. Russo

11 and I talked in detail about this at the time.

12 Q Let me back up on a couple of things you

13 mentioned. First, in terms of quantities of TOWs, I believe

14 it is correct that the first number that you were given was

15 4000?

16 A About 4000 was given to me by Gen. Register, as

17 passed down to him through the DoD leadership.

18 Q At what point did that increase to 4500?

19 A Within just a couple of days of me giving the

20 first initial price quote tc

21 Q And at what time did it go from 4500 to 4508?

22 A Also somewhere in the very early days of that

23 mission. There was never any explanation for the other 8.

24 We at the Army level asked^^^^^^^^Hwhy on such an

25 important mission were we screwing around with the number of

mmim

625

mm&m

""iiLNLVIHHI

1 "8"? There was never any adequate explanation provided for

2 that.

3 Q Did it become a bit clearer when the second

4 shipment came to the number of 508 TOWs?

5 A No. I could speculate on why that was the number.

6 I would rather not speculate.

7 Q Okay. In terms of the MOIC, in layman's terms is

8 it safe to say that if the rocket does not launch within a

9 certain period of time, the MOIC shuts it off?

10 A Ifes, sir, that's correct. The idea is to prevent

11 a flyback. That was the principal, the gut reason for the

12 MOIC, to prevent an accident.

13 Q And the third thing, before you continue. You

14 were given the MOIC price of $300 by whom?

15 A By George Williams, the Deputy Project Manager in

16 the TOW office at MICOM.

17 Q And was that a precise price, or a rough price?

18 A George and I understood that day, since he knew

19 that I was going forward, I told him external to the Army,

20 although he didn't know where that was, to get funding

21 approval that we had to be straight. So he was taking that

22 as a price that I was going to go and obtain funding on.

23 And that was the price to put the MOIC on, and put the

24 missiles in Condition Code A.

25 Q And for the record, did DA ever learn that that

UNCbftSSinED

626

1 was a little bit below the actual price?

2 A yes, sir. DA learned that in November and later

3 of 1986 that in fact the price should have been closer, I

4 believe, to about $350.

5 Q $352? Does that sound about right?

6 A Yes, sir; that does sound right. I was with Col.

7 Lincoln when we both learned that in November of '86.

8 Q And you mentioned that you did at some point

9 receive a certification of funds from the CIA. I believe

10 that was 13 February. Is that correct?

11 A About half an hour before I got on the plane to go

12 to Redstone for the second scheduled liftoff, again it would

13 have been aborted. I wasn't planning that day on getting on

14 the plane to go, unless we saw the letter.

15 Q And was that the first piece of paper received

16 from the Agency on Snowball?

17 A As a matter of fact, sir, it was.

18 Q And what would you say the total package of

19 paperwork from the Agency comprised?

20 A At that point, that single piece of paper simply

21 said that X number of millions of dollars was provided to

22 the Department of Army, to Ma j . Chris Simpson, in support of
2 3 Project Snowball. It did not have a word on there about

24 delivery dates, places, nomenclatures, missiles, or anything

25 else. bj&iM^ .<•

627

UifkASSiriEO

Q And I believe you told us — what I had in mind — I
believe you told us in April that the total package of
paperwork that you saw from the Agency was four letters
certifying funds, three for TOW shipments and one for HAVfK
repair parts, plus a HAWK repair parts' list?

A Yes, sir. That is the sum total. Besides the
letters of certification of funds, the HAWK repair parts'
list at that time as I recall was about 14 field typed
pages, and that was the sum total of paperwork that I got
from the Agency on those two missions together.

Q Okay. Was there a point early on in which you

if the purchaser needed launchers for the

A Oh, absolutely.

Q Tell us about that conversation.

Q Col. Lincoln's office, besides supporting the
Army, also supports a whole host of FMS countries. I
believe there's something^^^^^^^^^^^H countries besides
the U.S. that have bought TOW missiles from America.

Typically the purchasers on FMS cases bought
launchers to go with the missiles. I went back at his
request to ask^^^^^^^^H did he need launchers. This was
a logical thing to ask. He said, no. When I went back to
Col. Lincoln, that was another issue that I had forgotten
earlier, Col. Lincoln said, well, that limits down the

ONCIiSSIFIED

628

UNCLASSIFIED

1 places that we're supporting.

Q Did you as)<^^^^^^^^^P if the recipient had

3 launchers?

4 A Yes. As a matter of fact, the answer was, yes,

5 they did. Col. Lincoln did surface, which he should have

6 done and did do professionally, because he said that they

7 were concerned about keeping a record of what country got

8 them because of flyback problems and other deterioration of

9 lots.

10 Weapons, missiles, for the record, are a lot like

11 drugs. They deteriorate over time, and the missile command

12 keeps precise track of customers so that they can notify

13 them immediately of any changes in condition on the

14 missiles.

15 Q Or in case of a recall?

16 A Yes, exactly. ^^^^^^^^Hsa id that any of that

17 sort of information he wanted Col. Lincoln to feed to me,

18 and that I was to feed it to him through my office. So we

19 declined to give Col. Lincoln at his request the ultimate

20 destination of these items.

21 Q Vfhen you found out that the country did not need

22 launchers because they already had them, did you then
2 3 speculate on who was to receive them?

24 A Yes, sir, I did speculate. And of course it was

25 pure speculation cm,f^J2art, only.

part, I

629

What countries did you speculate on?
I had speculated that they might be

We had conflicts going on in a lot of parts of the
world where the U.S. had interests.

I had been asked I know by the House Committee,
John, in late December would I have speculated they were
going to Central America? I would have said, that would
have been one place I would not have speculated simply
because with that U.S. signature stamped all over those
weapons in an area we weren't supposed to be in would have
drawn an awful lot of attention to us.

Q You said early on that you were not told that
these shipments would take place in three increments. When
did you find that out? Was that when^^^^^^^H talked to
you?

A Later that week, right. Gen. Register knew
nothing about that that first Saturday. In fact, all he
knew was that we might have to support the mission in as
early as 72 hours, the whole mission.

630

ONCUSSIFIED

1 Q When you found out about the requirement for the

2 MOIC, did you brief Gen. Russo on this development?

3 A Immediately. I, as any good action officer would

4 be on a very important mission, I was concerned about the

5 change in truth. You know, we had gone from two weeks

6 earlier to yes, we can support the mission; to now we can't

7 support the mission without more costs and more time. That

8 was critical.

9 And I got to him that same day, and he said, let
10 me know what the CIA says when you go over and talk toJ

^^^^^^^^^^^^^^^^^Vwas very concerned. Shortly after

12 this MOIC problem became known. Gen. Russo asked me to

13 prepare a message and send it down to Col. Lincoln. Now

14 this is an open message via the Army AUTODIN system. It

15 establishes a printed record of some guidance.

16 The guidance was that we had got some quotes from

17 MICOM of what it was going to cost to do these

18 modifications, and Gen. Russo wanted me to tell Col. Lincoln

19 in this message, which I did — he released it personally —

20 that we understand the following costs have been incurred to

21 dat«,* we understand the following costs are to be incurred.

22 No additional costs will be incurred without prior approval
2 3 from this Headquarters.

2 4 That sort of guidance went down as a result of all

25 that meeting. But the basic decision was since my — and I

"1L*8SIFIED

631

^imssim

called Col. Lincoln up shortly thereafter to give him the
go-ahead, to say we've got the funds.

Q You talked to^^^^^H and he said, yes, we can
pay? _

to^^^^^^^^^^^l This now a
funding issue. I did get back to^^^m^^^^^^Hlater that
day, but the first and most important guy was the guy who
was controlling the money. That was the Assistant Director.
You have to keep in mind that|
and

and it was important first to make sure that he
was going to fund this.

Q But you went back with him after you talked with
Mr. Williams and found out the MOIC was necessary, and that
it would be —

A Absolutely. That all happened like all at the
same time.

Q ^^^^^^^^^^^^^Hsaid yes as to —

A He didn't say yes, right away. He came back to me
I think within about 24 hours to tell me that, as displeased
as he was about the change in the truth, that he would in
fact— he did at that time mention to me that this was
critical not to have any more changes in the truth, which we
weren't done with yet anyway, but neither one of us knew
that, he said, because the White House was controlling

632

1 approvals in the changes on the funding.

2 Q All right. Let's go to the next complicating

3 factor of the replacement costs. 1 believe somewhere about

4 the second week of things, Col. Lincoln raised that issue

5 with you? Is that correct?

6 A Yes, sir, he did. He called me up and he said he

7 had been studying — this is a conversation exclusive of the

8 MOIC — Col. Lincoln called me up to say, Chris, he said, I've

9 been studying this business of these missiles, he said and,

10 he said, here we're going to take almost 4500 missiles out

11 of the wholesale inventory, he said, which is a large

12 percentage of our wholesale stock.

13 He said, I cannot take and buy a new state-of-the-

14 art missile for $3169, plus the MOIC, it was still in

15 materiel, and he was telling me that the price to buy a new

16 missile was something over $8000. And, he said, I really

17 feel we ought to be charging a higher price.

18 Q So when he talked about the price for a newer

19 missile, he was still talking about a basic TOW?

20 -dft* ^^' Mell, the term "basic TOW" applies to a basic

21 I^Pbiich has an old model warhead on it. The new models of

22 the TOW, called ITOW and TOW-2, have a more advanced warhead

23 on them that will penetrate a greater degree of armor, and

24 also the more accurate killing range.

25 At the time that Col. Lincoln raised this issue

633

UNusm

with Be, I went to Gen. Russo with our pricing regulation.
And this is a formal request, now, from an Army full Colonel
who is the Army's principal manager of TOW missiles not to
be taken lightly, and we didn't take it lightly, we took it
very seriously. I got out the pricing regulation —

Q That would be AR37-60?

A Right. The Army's regulation on pricing for
materiel and services. I showed Gen. Russo that the
regulation said that on items no longer in production, the
basic TOW had not been produced since 1976 by Hughes
Manufacturing; that on items no longer in production, that
the Army pricing regulation did not allow us to charge any
more than the last price paid. And that last price paid,
which we now know to be an error, but what was published in
the AMDF as the last price paid was $3169. It turned out
that the last price the Army paid was something higher than
that on the last contract in '76.

Q But as best you knew at the time —

A As best all of us knew, both at MICOM and at DA
ay office, we knew that that was the last price.
\,' Russo was concerned enough about the price that he
called one of the lawyers — I can't remember whether it was

UNObtSSiFIED

634

UNCliSSIFIED

1 Q You told us in April it was Tom Taylor.

2 A Too Taylor, though, came in to discuss the Economy

3 Act. What Gen. Russo was concerned with was not so much

4 what the regulations said on pricing, but also was that

5 particular regulation in the particular paragraph I was

6 quoting him, was that the proper vehicle for transferring

7 the weapons to the Agency.

8 Q Now when you make a transfer to the Agency, you

9 use the Economy Act?

10 A Yes. That has been the standard legal statute

11 cited as the basis for transferring weapons and materiel to

12 the Agency.

13 Q And had you in your previous 2-1/2 to 3 years had

14 occasion to use the Economy Act?

15 A As a standard. That was the standard statute

16 for — not the only statute. I mentioned to you in April that

17 we also used the Leasing statute to transfer materiel. That

18 was things we were going to get back, though.

19 Q And Tom Taylor was familiar with the Economy Act?

20 4K'A Very familj
21

22 Q And did the Economy Act permit DA to charge the

2 3 CIA replacement costs?

24 A No, sir, it did not. It required that we charge

2 5 the standard price plus incremental costs, incremental costs

UNCmSSIFIED

635

UNCUSSIFlEi

1 balnq ancillary costs related to physically picking up and

2 moving materiel, and labor and handling costs, so to speak,

3 and transportation.

4 Q And by "standard price" you mean either the last

5 procurement price, or the price published in the AMDF?

6 A Exactly.

7 Q And in most cases, that would be the same?

8 A Normally the last published standard price would

9 be the last manufacturing price paid, plus some Amy costs

10 added into that.

11 Q Did you ever ask^^^^^^^^| f or the record, for

12 your record at that time, whether the Economy Act was being

13 used?

14 A Yes, as a matter of fact. We established that in

15 the very early days, within probably the first 72 hours of

16 getting together on the mission.

17 Q And when you asked him that, did he then ask|

^^^^Hto verify that?

19 A That is correct, sir. We did that, again, because

20 ^^4^ "°^ have the standard piece of paper that normally

21 waM0K cite the basis for asking for Amy support. So I

22 wanted to make sure there weren't any glitchesT Me~wore______

2 3 doing the same thing with the basis for transfer that we

24 were doing with establishing a nomenclature and a price. We

2 5 were making sure that our two interests were..^gual. That

ONWSIFIEO

636

OilUSSIFIED

1 is, .that I was providing what he wanted in accordance with

2 how he wanted it.

3 Q And when you and Gen. Russo and Tom Taylor had

4 some discussions after Col. Lincoln raised the issue of

5 replacement costs, did Tom Taylor ever give his legal

6 opinion that you could not charge replacement costs?

7 A Yes, sir, he did.

8 Q And did you communicate that back to Col. Lincoln?

9 A Yes. And he was unhappy with that decision, but

10 he said he knew we would have to live with it, then.

11 Q Before we get to that discussion, did Gen. Rusao

12 at this time then go to Gen. Colin Powell to discuss this

13 issue?

14 A No, sir, I don't believe he did at that time.

15 Q Did he do that at a later point on replacement

16 costs?

17 A He may have. My memory is fuzzy on that right

18 now, sir. That is something I'll have to go back to my

19 notea to look at. I think what is important is, though,

20 ^^^K¥>c« I got back to Col. Lincoln—I do think, for the

21 i^Hpi, Gen. Russo wanted to charge a higher price. He said

22 it was a dam shame, if I might quote him, that we couldn't

23 charge a higher price. He said, but Chris, it doesn't look

24 like the regulations allow us to do anything other than

25 charge the old standard price.

ONCtMSIFlEO

637

1 He also said, for the record — and he said, and

2 anyway, he said, the other thing is that he said, we're not

3 exactly giving away a brand-new state-of-the-art missile

4 with 100 percent of its useful life left. He said, these

5 lot numbers, as I understand it, he said, at the end of —

6 some of them are 15 years old, and some of them only hav
^^^^^^^^H of life

8 He said, what we've got here is an old missile

9 with a limited range that is

10 ^^^^^^^1 So Col. Lincoln is not exactly trading one for

11 one. He said, he's going to get a brand-new state-of-the-

12 art missile with a very long extended life and, he said, so

13 he's not exactly, you know, losing^^^^^^^^Bof his

14 inventory.

15 But he still was unhappy that we weren't going to

16 be able to put back into the Army wholesale inventory the

17 same number of missiles that we took out.

18 Q Did you ever get a sense of whether the Army

19 leadership itself was happy with that decision?

20 „>: A Hy interface with the Army leadership daily was

21 G«i|^° Russo, and he would normally reflect to me what the

22 feelings of the leadership were. I got no feeling from him

23 at all at any time in this that there was anybody above him

24 that was unhappy with that.

25 MR. SAXON: Let's go off the record a moment.

IFIEO

638

UNIMSSIFIED

1 [Discussion off the record. ]

2 [Whereupon, a brief recess was taken.]

3 BY MR. SAXON: (Resuming)

4 Q Major, while we were off the record I think that

5 you in fact said you did recall that when the issue of

6 replacement costs came up and you, Tom Taylor, and Gen.

7 Russo had some discussions and conferred about this issue,

8 that in fact Gen. Russo did see Gen. Powell at some point?

9 A Yes, sir; that is my recollection.

10 Q Tell us about that.

11 A Sir, after Gen. Russo went to see Gen. Powell, the

12 issue was he was going to clarify with Gen. Powell that the

13 Economy Act was the proper basis for transfer. Gen. Powell

14 got back to him and assured him that that was a proper basis

15 for the transfer.

16 After that particular meeting. Gen. Russo ceune

17 back and met with me that same day. I was waiting while he

18 went to see him.

19 Q So Russo and Powell had a face-to-face meeting?

20 ^Kr They had a face-to-face meeting to discuss that

21 ^4|p|^* Once that had been accomplished — that is, that we

22 had clarified that that was the proper statute — at that

23 point we became locked in on our decision that since the

24 Economy Act pricing rules were very clear in the Army

2 5 Recfulation AR37-60, there was nothing to do but charge the

UNWSIFIED

639

INWSIFIED

1 last published standard price.

2 As I recall, the one other thing that Gen. Russo

3 asked me to do on that was to verify with Col. Lincoln that

4 the standard price published was a correct price, and we did

5 that. At that point, we went forward.

6 He weren't done with the pricing issue yet, of

7 course, on the basic TOWs. It only was a few days later in

8 this dynamic environment until George Williams called me up

9 to tell me the truth was changing again; that although he

10 had committed himself to outfitting 2300 basic TOWs in

11 Condition Code N with a MOIC, it turned out now that Hughes

12 could not manufacture the MOICs fast enough to meet the Army

13 deadline of having these missiles ready within a short

14 number of weeks.

15 Q Are we into the third week, now?

16 A Yes, we are sir, more or less.

17 Q Before we go into the issue of the changing the

18 warhead, after Gen. Russo met with Gen. Powell and the issue

19 of r^laceaent costs was put to rest, did you communicate

20 *^^0**^^ ^° ^°^- Lincoln?

21 ^SP'^ '^* BAB^ dayr sii^«

22 Q And at any point in that time, or was it later,

23 when George Williams asked you if the customer would prefer

24 the ITOW, the improved TOW missile?

25 A That came up when the next discussion surfaced.

ame up wnen the next disc

ONCmFIED

640

l'«SUSSIfl£D

\ ilWILILII

1 Th« discussion came up at the time when we found out — excuse

2 me. I want to say to correct the record here, again I kept

3 notes on this, that discussion either came up at the time

4 that the Condition Code N surfaced, or it came up later when

5 we retrofitted some ITOW missiles. I'm not precise now. I

6 could go back and check for you and look at my notes.

7 Q I understand, although I don't think it's material

8 as to precisely when it came up in connection with this

9 issue.

10 A The substance of the issue was that George

11 Williams asked me to go back to the customer, and the whole

12 issue was we didn't have enough of Condition Code A basic

13 vanilla TOWs right now to support the short requirement.

14 Could I go back? We offered the other missiles to

15 the Agency. I did that ^°^^^^^^^^B ^^ came back very

16 quickly after checking with^^^^^^^^H|and turned them down

17 and said, no, all they were interested in was the basic

18 vanilla TOWs.

19 Q So they were offered an improved product —

20 ^^IC' ^^^ ITOWs —

21 ^1^ — ^^^ they would have been at a higher cost.

22 A Yes, sir. And it would have been at those costs
2 3 that Col. Lincoln was quoting. It's important, again for

24 the record, that both the ITOW and the TOW-2 were still in

25 production, and we would have then been able to charge

641

UNCUSSIflED

1 replacement costs. Under the Army pricing rules, if an

2 items is still in production, you charge the latest

3 replacement cost for it.

4 Q And as opposed to $3169, or with the $300 MOIC

5 $34 69, what would we have been talking about?

6 A $8000 to $11,000, depending on the configuration

7 of the improved TOW model charged.

8 Q Okay. Now Mr. Williams gets back to you and says,

9 we don't have enough MOICs because Hughes can't manufacture

10 them fast enough. What alternatives did you discuss with

11 him?

12 A Okay. The principal alternative that he offered

13 to me at that time was that he had some ITOW missiles

14 sitting out at the Iowa Army Ammunition Plant, and he said

15 they had a rocket motor on them that would do the job. And

16 it was the rocket motor that was the faulty part of the TOW

17 missile, not the missile head.

18 Q Now TOW is really two parts?

19 A It's in two parts, sir. It's a warhead, and a

20 SbH|| motor, held together by six little screws. It's that

21 ^Hbi. All the complicated part of the mechanism is the

22 rocket motor.

23 He said he had some other rocket motors that he

24 could retrofit for me. He wanted my assurances that I was

25 willing to do that and was willing to pay for the costs of

UNCIISSIFIED

642

UNCLASSIFIED

hauling the missiles from Iowa to Anniston, which now you're
talking about going from the State of Iowa to the State of
lower Alabama, and the costs of separating the missile and
the warhead and retrofitting the motors on. Also, you had
the cost of taking the old rocket motor off the faulty
missile.

So you had a lot of work here. I went up to
discuss that whole proposal — that was one of the proposals
he offered me, John. As I recall, there were a couple of
other ones that day.

Q Did you take that proposal tc

A I took it to Gen. Russo first. To tell you the
truth, I was alarmed about taking any more changes in the
truth ^o^^^^^^^^^^^H especially since I had been
admonished only a few days earlier not to come back any more
with any more changes in the truth.

But I went up and told Gen. Russo all that we were
doing. I think he had, one concern he had was, he says,
what are we going to do with these ITOW warheads? Now this

improved part of the mechanism. I told him I had
gcVVVn— I got back with George Williams, and then George
Williams says, I believe I have a potential FMS customer for
these warheads without any rocket motor at all.

It was some Middle East country at the time that
we did business with regularly. I don't know yet whether we

wismm

643

i/Ncussm

hav« sold those now. A lot of time has passed since all
that event took place. But Gen. Russo bought off on the
concept, subject of the ability of the CIA to pay for it.

George had given me some ballpark figures on costs
to do the retrofitting. I went back toj
with this. Once again, we had umbrage, and disgust, and
dismay, and he told me once again he would have to go, and

8 he really didn't know whether he could do it or not, but he

9 would see--
Q He would have to go where?
A He would have to go ^°^^^^^^^H^ ^^° would then

again have to go deal with the White House. He again urged
me that he was having to deal with the White House on each
change in truth — meaning that he , ^^^^^^^^^H has having to

15 do that. But that is, the Agency was being forced to go to

16 the White House on any changes. And he said, please, let's

17 make sure these incremental costs, he said even let's pad

18 them a little bit in terms of add a few more thousands of

19 dollars on th«a so we don't have to go back in for $10,000

20 ord^OfOOO out of a half a million.

21 jfe'- As I recall, the figure to do that work was about

22 $400,000 in incremental costs. In the end,]
2 3 did agree to fund all of that, and I called back George

24 Leachman — Chris Leachman and George Williams, and told them
2 5 to proceed.

644

Once again, they had conunitted themselves that
they could get the work done in time. I would mention that,
although back in late January we thought we might be all
done with this mission as early as the end of February, by
the time we had got to the business of agreeing to retrofit
missiles, three-and-a-half weeks had already passed. But
we're still leaning forward in the foxhole, so to speak.
That is, it is still being ready to support it a day or two
ahead at a time.

Q We are between the first and second shipments?

A Yes, we are. We've passed the first shipment at
14 February. The business in retrofitting the missiles
probably took place, as I recall, about the third or fourth
week of February.

Q Now when you — I guess you got approval froml

A Yea. He told me he couldn't get the money right
away. That was an issue at the time. He said, I can't get
the paperwork to you right away, he says, but I'll give you
The agreement that he and I had, and again a
in of high honor and good standing with me as he had
worked on many complex things with me and had never let me
down, said if for any reason we can't get this additional
money from the White House, or the mission aborts, or both,
he said, I will personally make this money available to you

^n* p«pez

j4b '

yNCtlSSlFlED

645

1 out of other funds.

2 Since he was a man of honor, I told Gen. Russo I

3 was going to go ahead and take his word, even though we

4 didn't have the piece of paper. And Gen. Russo I think

5 asked me at the time, well, has he ever let you down before?

6 And I said, no, never. And on that basis, the credibility

7 of a good man, we went ahead.

8 Q To your knowledge, was that the amount of money

9 which MICOM puts at $377,000 which they committed out of

10 their own operating budget? Do you have any knowledge of

11 what I'm referring to?

12 A Yes, sir, that is the ficfure. And that is the

13 message. I said, about $400,000, but that is the figure. I

14 would mention for the record that the only reason that MICOM

15 had to fund that out of their general budget, we told them

16 early on in this mission — that message went out in late

17 February, mid- to late February— that as soon as they billed

18 us, we would pay them within 30 days. That was our

19 agM«B«nt with them, which is the standard government

20 )M^El*9 arrangement between all agencies.

21 Wip It was not until late May, early June, that they

22 actually saw fit to bill us. The fact that they carried

2 3 those expenses out of their own operating budget was really

24 a fault of the billing mechanism at MICOM and not the

25 Department of Army. I would mention again for the record

mmm

646

uNciissm

1 thst^ once we presented the bills to the Agency, they were

2 paid extremely promptly.

3 Q For what it's worth, would you have any knowledge

4 of the fact that to this date they have not been reimbursed

5 that $377,000?

6 A That does not sound correct to me. I know that

7 when I had left there, that every bill that they had

8 presented to us had been paid, as presented, and that

9 bill — again I would have to look at the figures, John, but

10 a recollection of mine is that the incremental costs that

11 they did bill us for we had paid by the time I had left.

12 MR. KREUZER: Could I just interject here?

13 At any time in this process did any fund citing,

14 or billing, or any similar type financial activity come from

15 or originate with, or involve Army Materiel Command?

16 THE WITNESS: Not on Project Snowball at all. In

17 fact, for the record — I mentioned this in my testimony in

18 April — early on Col. Lincoln surfaced a concern with me that

19 he 4^tn't want to be working on this very complex and

20 4^^^Hp*** project without having the AMC leadership

21 dHHld. He said, if we would not get AMC headquarters

22 involved, that he was going to ask Gen. Burbules, for the

23 record the Commander of Missile Command.

24 I went to Gen. Russo with that, and he called

25 while I was in his office and talked to Gen. Thompson, who

llNCIISSiFI!

647

UNCLASSIFIED

1 is th« four-star General in charge of Army Materiel Command,

2 and told him that I was working with Col . Lincoln on a very

3 quiet project and appreciated his good support, and that

4 issue then was laid to rest.

5 That was the only involvement throughout this

6 project with Army Materiel Headquarters.

7 MR. SAXON: Let's go off the record a moment.

8 [Discussion off the record.]

9 BY MR. SAXON: (Resuming)

10 Q Major Simpson, when the approval from the Agency

11 came for the retrofitting and transportation, did you

12 communicate that to the folks at MICOM?

13 A Yes, sir, I did; the same day.

14 Q And did there come a time shortly thereafter when

15 you had a conversation with Mr. Williams, the Deputy Project

16 Manager-TOW, about changing the price yet again to take into

17 account that in essence one-half of the missile was going to

18 be an improved version?

19 A Yes, sir, we did have such a conversation.

20 ijKMJk And did you agree that you would take that forward

21 aflHpla what could be done?

22 A Yes, sir, I did; although I told them, personally

23 I was against changing it. I remember that conversation. I

24 may have had it with Col. Lincoln, or it may have been with

25 Chris Leachman, but one of the three principals in the

648

M&mm

1 offic*. I said, guys, I'm not willing to even surface that

2 issue to the DSLOG, unless you want me to do it.

3 Q Did you —

4 A And — Oh, I'm sorry.

Q Did you talk toj^^^^^^^^Habout it?

6 A I did not talk to^^^^^^^^Babout that at all.

7 I don't believe the Agency ever got involved in that. I do

8 know that Col. Lincoln did do what I asked him. I was so

9 disgusted at this point with the events that had transpired,

10 I have got many other missions going on, and I think that

11 the concern was I just didn't have time every day to deal

12 with a changing set of ground rules.

13 I said. Col. Lincoln, if that issue is going to

14 get surfaced to the DSLOG level, I said, it needs to be done

15 from the MICOM end; and I do know that that did happen, that

16 Col. Lincoln went to one of his bosses, one of the Generals

17 at MICOM, and they did call and talk to Gen. Russo.

18 Q I know that a lot of these particular details are

19 hard to recall, but my notes from when we met in April

2 0 1 n0r>te that when this issue was raised and you had these

21 dt^iusions, I think you said with Mr. Williams, that he

22 said the rocket motor on the ITCH had a longer range, and

23 that he wanted to be paid more for the improvement?

24 A I do recall that he did say that.

25 Q And my notes reflect that you talked tc

i-nuu

649

VNCUSSIFO

1 ^^^^^^H and he said that he really could care less that

2 something along the lines that if they wanted to give him a

3 better one, fine, but he didn't order it so he wasn't going

4 to pay for it.

5 A Sir, I do recall that. Now my memory is

6 refreshed. That was what was discussed.

7 Q Now at this stage, I think we have even another

8 complicating factor. That is, that discussions began to

9 focus on a different stock number for a basic TOW with MOIC.

10 What can you tell us about that?

11 A Another conversation in these days of changing

12 environments and facts was that George Williams called me up

13 to say that they had done some more study, and they now have

14 surfaced the fact that there is a new stock number for MOIC.

15 I guess the gist of his conversation was to the effect that

16 the $3169 purchase price for the MOIC, plus the $300 MOIC,

17 had turned into a price that all of us now know never

18 existed, and it was somewhere on the order of about $8000.

19 Q All right. Let me see if I can —

20 dF'^ I^ ^ could help you, I cc- ^ walk you through what

21 2Ml|p|lly happened back in those years in the late '70s.

22 g Good.

23 A In the late '70s after the flyback problem

2 4 surfaced, at that time Hughes was making a later version, I

25 would say a later production run of the missile.

650

UNMSIFIED

100

1 Q of the basic TOW, still?

2 A Of the basic TOW. They redesigned the design,

3 because the MOIC that was being provided to Anniston to put

4 on was kind of like a slap-on modification. The engineers

5 at Hughes redesigned the basic configuration of the

6 missile —

7 Q To build the MOIC in it?

8 A To build the MOIC right into the system. It was

9 kind of a quick-fix engineering. But now it is part of the

10 assembly process of a brand-new item. That particular

11 missile — which there's some doubt at MICOM whether that

12 should have ever happened — was now coming off the production

13 line and given a new, different stock number by the Army.

14 Q As a new item?

15 A As a new item. And the price was around $8000, as

16 recall.

17 Q Would it have been $8435?

18 A That sounds like a figure I remember.

19 I tried to argue with George at the time that that

20 n^^Klwve been true for a missile that came off the

21 pJHBtlon line years later, I said, but are any of these

22 15-year-old missiles that you're giving me, were any of them

23 priced to the Army at $8439?

24 And George said, no. And I said, well, as far as

25 I'm concerned, an old missile with a MOIC welded onto it

UNCLASSIFIED

651

*WSS/f/fD

101

1 datH^ at MOIC, I said, is it, or isn't it costing the Army

2 $300 to do that? And he said, it is. I said, well, I'm not

3 willing to give you any more money for that, and I'm not

4 willing to surface that issue, either, up the chain of

5 command .

6 Q Okay. Let me review what you've just said. After

7 the flyback problem was created, Hughes began to manufacture

8 the TOW missile with the MOIC in it, which MICOM chose to

9 classify in the AMDF as a new item and gave it a new

10 national stock number, and a new price, the price of $8435.

11 A Yes, sir; that's correct.

12 Q So that if someone at Anniston Army Depot, which

13 we understand to have happened, were to have been told "we

14 want a basic TOW," and it were to have a MOIC, they could

15 look in the AMDF and, whether this should be the case or

16 not, could find a legitimate price for a basic TOW with MOIC

17 of $8435?

18 A They could do that, although there was some

19 r«ir«l«tion at MICOM that there was never actually a price

20 idHi^*^ approximated the AMDF price; that it was something

21 o4^H^ihan that price, but it was a price higher than,

22 considerably higher than the basic vanilla TOW with a MOIC

23 in it.

24 Q But if they used the computer system that existed

25 at Anniston Army I^ypct ATf* ff^iiFikP^-if-ili? number for a TOW

652

102

1 wiHit MOIC, they would get~

2 A The model number. They would have got a $8439

3 price, yes, sir.

4 Q And as you walked through this with MICOM, what we

5 were doing was not involving those missiles at all, but

6 taking the missiles purchased by the Army for $3169 and

7 simply welding the $300 MOIC on?

8 A Yes, sir; that's correct.

9 Q But the two items did have different national

10 stock numbers?

11 A A basic vanilla TOW with a MOIC did.

12 Q And did anyone at DA level with whom you were

13 dealing realize that when you put a MOIC on a basic TOW,

14 according to the AMDF, that it had a different national

15 stock number and therefore a different price?

16 A No, sir; no one at DA did, at that time. I know

17 that Gen. Russo late in November of '86 ceune to the

18 conclusion that, gee, if we had only known.

19 Q And at this point, up until this point, no one at

20 l^^K^Q^^v?

21 ^9P ^° °"^ ^^ MICOM ever told us all these details.

22 This wealth of data that we have just discussed all surfaced

23 during the November-December '86 time frame.

24 Q How did this come to Mr. Williams' attention?

25 A When yeuwsijt^ibow did this come, sir?

653

103

1 Q Back in late February. He brought this to you.

2 How had it come to his attention?

3 A I'm not quite sure, sir. Through one of the

4 people that works for him. He never revealed those details

5 to me.

6 Q At this point, you took this information, I

7 believe, to Gen. Russo. Is that correct?

8 A Yes, sir.

9 Q Did he then have a conversation with Gen.

10 Burbules, the head of MICOM?

11 A Sir, he may have had that conversation with th«

12 Deputy Commanding General. I believe that Gen. Burbules may

13 have been away. He may have had it with Gen. Burbules.

14 That is possible. One of the principals there at MICOM,

15 either the Commander or the Deputy Commander. The issue was

16 discussed.

17 Q As to whether to pay the $3469 —

18 A Or some other price.

19 Q And did anything change?

20 Mgk Nothing changed. Gen. Russo told me that — he

21 clflBl ■« up to his office. We were meeting almost daily on

22 this project—and told me that the issue of price had come

23 up. He said, I was worrying about the mission being hurt,

24 damaged, or otherwise deteriorating because of all of the

25 changing stories. He said, I couldn't see really how we

yrmsiFiED

654

104

could charge more than $3469. And, he said, I told the
General that he spoke to, he said, the price is going to
rest as it was.

Q And at some point did you get back with

in this time frame, and he told you he didn't
want any more changes?

A Well, by the tine this conversation that Gen.
Russo had with the Commanders at MICOM was going on, we had
already gone^^^^^^Hwith three more changes. I mean,
those changes that we've already discussed. I think he

11 would of just about had apoplexy had I gone back with

12 another change. ButHJUJ^^^^^^and I have worked together
for several years. If I had actually had a change, I think
he would have done his best to accommodate me.

Q When ^^^^^^^^^^H| expressed, at whatever point,
some dissatisfaction that things kept changing, did you
communicate that back to Col. Lincoln?

A Yes, sir, I did. As a matter of fact, that was
what led to when Col. Lincoln and I discussed the business

was not willing to surface another change in the
txVH to the Ainny leadership. I says, as far as I'm
concerned, you know, that needs to come from the MICOM
level. I thought, let you guys go up and face the lions and
explain why the truth keeps changing.

Q And was that his phrase? Col. Lincoln told you

IS that hxs phrase? Col.

Mm\m

655

105

1 that the truth kept changing?

2 A No, that was my phrase for him. I said,

3 geezuschrist, you know here we are. When we told you the

4 first day that the highest levels of the Army leadership

5 were looking at this, you know, why couldn't we be straight

6 the first time. I said, now we've gone through three

7 different changes, and the truth keeps changing. I pointed

8 out, even on the MOIC business that when they had asked me

9 for the money to pay for the 2300 MOICs, I said, nobody even

10 bothered to check with Hughes at that time to see if they

11 could meet the deadline scheduled. I said, you find that

12 out later.

13 So I guess my point from an action officer's

14 viewpoint was, I was frustrated by what I saw as kind of

15 loose coordination. It was my opinion that any more of

16 those changes in the story needed to be surfaced from their

17 level to the Army leadership.

18 Q Now let me go back quickly and clean up one or two

19 1004^ ends that may have been left on the first shipment

20 i^^^Kj^tually took place on the 14th of February.

21 ^^Bm^ ^ y°" alluded to earlier, these did not actually

22 get airlifted from Redstone?

2 3 A No, sir, they did not.

24 Q Tell us what happened with regard to that plan?

25 A Sir, briefly, because of the period of 29 January

?>;?,?«

-nuf.

656

2
3
4

5
6
7
8
9
10
11
12
13
14
15
16
17
13
19
20
21
22
23
24
25

u4u

106

to 13 February that we were changing the delivery date one
day at a time because of delays and problems with follow-on

from ^^^^^^^^^^^^^^Hl^^H asked
the afternoon of the 12th of February, could I get with MAC
and see if they would support us on the 14th. I said, no.
Hell, no.

When I went back to him with that, he said, well,
we're really in a jam, he said, because now we have the
follow-on transportation for^^^^^^^^^Hand we can't
change that. He said, how are we going to get these
missiles?

We called and talked and I said,
do you think we can truck something from —
we had hauled stuff before f ron^^^^^^^^H f rom Redstone,

Redstone l^^^^^^^^^Psaid ,
get ahold of my favorite trucking company and see if they
fiiake it in the time frame.

And that was Baggett Transportation?
A Yes, sir. That was Baggett Transportation,
called me back shortly that same day and said Baggett can do
it. Where do they need to go? And I did some dealings with

the Baggett dispatcher, and we got them guided into our

657

2
3

107

remote area at Redstone where the missiles were being
stored.

The upshot of all of it was that I was listed as
the consignor from Redstone^H^^^^^^^^^^^f Actually, they
were never told at Redstone that they were going
that's

Again, there would have been no reason in the
white world for TOW missiles to go to,

Q For the record, are you aware that Baggett
Transportation has as its slogan "Don't Mark It Rush. Tag
It, Baggett!"? Have you ever heard that?

A No, sir, I'm not.
''4:Q Well, for the record that's true.

*- All right. You're on the ground at Redstone on 13
February. Baggett, I believe, arrived around 6:00 o'clock
p.m. Is that correct?

A Yes, sir, that is correct.

Q Then you started loading around 7:00 o'clock?

!!H8l«lfiE0

658

108

1 A Yes, sir, and it took us until probably about 1:30

2 in the morning to finish this. This is a very complex

3 procedure, because it isn't just throwing boxes on trucks.

4 Because of the nature of the cargo, each box of missiles and

5 each box had one missile in it —

6 Q There were 1000 boxes?

7 A 1000 boxes that are a crate that are about 4 foot

8 long and a foot length by width. It was a foot square, and

9 about 4 foot long, and weighed a lot of pounds, and it had

10 to be blocked and braced. So you actually have carpentry

11 work going on on each different box. Plus, the weight heul

12 to be equally distributed within the trucks.

13 Q Were there 90 tons, for shipping purposes?

14 A That sounds correct.

15 Q And was an MI company helping load the trucks?

16 A Yes, sir; it was an MI company that was stationed

17 at Redstone Arsenal .

18 Q And about what time did the last truck arrive?

19 A Sir, as I recollect, about 1:30 in the morning.
^^ im^ Then I believe you told us in April that you and

21 atff^^lM&chm&n left about 2:00 o'clock to go to your

22 respective places to get a little sleep, and came back

23 around 7:00? Is that correct?

24 A Yes, sir. And the objective of meeting again at

25 7:00 was to have me sign a sh_ip£ing_ document, a DoD shipping

i sign a snipping docum«

wmmB

659

iNCraFIED

109

document that he had prepared for me.

Q And that's 7:00 a.m. in the morning, the 14th?

A Yes, sir.

Q And that dociiment was signed; and did you keep all
copies but one?

A Yes, sir, I did.

Q And you had carried down with you, I think, an
individual from the Agency? Is that correct?

A Yes, sir.

Q Who was that?

name was^^^^^^^^^^^H They were

12 reluctant participant in the witnessing of this first load,

13 but Gen. Russo had asked me to make sure that legal
ownership for these missiles was transferred at Redstone.
The purpose of ^^^^^^^^^^^^^^^^^Halso known alias
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H his
purpose was to accept signature responsibility. And if
anyone wanted to look at the record, the retained receipts
in ay office show that^^^^^^^^^^^^^^^^^ from

20 CXA||ld sign for those missiles on the morning of the 14th

21 of^ftbruary. ^^^^

2 2 Q And you got a receipt from^^^^Halso attesting
2 3 to his receipt of the documents which DA had received in

24 affecting the shipment? Is that correct?

25 A Sir,^^^^^^^Hkept none of the documents from

SSIFIED

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110

th« DA shipment from Redstone^^^^^^^^^^^^^ If your
notes show that, they're in error. He kept no documents at
all.

Q Okay. And once the mission was completed, did you
ca 1 l^^^^^^^H to

Yes, sir, I did. I also called Cen. Russo.
youcal]^^^^^^^^^^^^

Sir,^^^^^^^^^Kind I talked. Whether it was
that day before I left to go back to Washington, or that
morning down at Redstone, I did talk to him right in that
time frame.

Q To tell him that everything had gone well?

Yes, sir.

And did you talk tc

At length; yes, sir.

Did you tell^^^^^^Hthe transfer had taken

Q
place?

A And at about what time^^^^^^^Hbxpect the
trucks. They had been due in at about 2:00 a.m., or 2:00
p.^^ Saturday afternoon, when they left. That was what the
dl^ll^cher had told me for Baggett.

Q m^^^^^^^^l promise to call you and tell you when

the trucks got there?

sir,^^^^^^^^^^^^^Hdid do
And what'

661

iMSIflED

111

A ^^^^^^^^^^^^Oi^^^^^^^^Hsaid, the trucks

2 that you were sending me have arrived safely^^^^^^Hsaid,

3 all is well. I got one more call on that operation, and

4 that was from^^^^^^^H^^^fthe following Monday to tell me

5 everything had lifted out and had gone successfully.

6 Q He was tht

7 A Yes, sir, he was.

8 Q And did he say something like, not only did they

9 lift off, but they're now over the borders?

10 A Yes, sir, he did.

11 Q And would that be the first time when you knew for

12 sure these were destined to go outside the United States?

13 A Sir, that was the first time I knew for sure, but

14 even from the early days from the mission, from the first

15 three days, I knew that they were going outside the country-

16 I was 99.5 percent sure, because we were waiting for follow-

17 on transportation by air from|

18 There would have been no us* for those within our

19 bordara.

20 -^ Q And did you ask^^^^^^^Hat that point if he

21 uali KXC for the airlift?

22 A Yes, sir, I did.

23 Q What did he say?

24 A As I recall, he told ne he used a private

25 contractor. Again,! ik^MA^t^Uk £K>BCMrB«(L about defense

662

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1 transportation channels. The reason for asking about

2 MAC was to make sure that DoD was off the hook. Once he had

3 told me that he had not used MAC, I knew that we were clear

4 and free. Really, that was the end of it for the first

5 phase of our mission.

6 MR. KREUZER: Did he mention who the private

7 contractor was? ^

8 THE WITNESS: No, sir. And I don't want to

9 speculate on who it was. They used a variety of private

10 contractors. ^^^

11 MR. KREUZER: That was what day? What day did^^f

12 ^^^^Htell you that they had airlifted out?

13 THE WITNESS: 17 February, sir. I say that,

14 because I got a call the following Monday. Friday was the

15 14th. I was told Monday that everything was gone.

16 BY MR. SAXON: (Resuming)

17 Q Let me cover — this is somewhat out of the

18 chronological sequence — but one additional item on the issue

19 of Congressional notification.

20 ^^Bk" ^ believe there was a point at which Department of

21 tlilpktBy civilian and military leadership continued to be

22 concerned about the issue of Congressional notification, so

23 that there was a memorandum drafted which went to Gen.

24 Powell on this issue. Is that correct?

25 A Yes, s ir. As a matter of fact , I believe that I

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113

1 drafted that memo for Gen. Russo. Gen. Russo and I

2 discussed a rough outline of what he wanted to say. I went

3 and typed it. He hand-carried it up, and he brought it back

4 down to me, and it had some notes written on the margin of

5 the finished memo that said it had been discussed with Colin

6 Powell.

7 Later, that memo went up one more time. Later in

8 the spring, Maj . Gen. Powell left and Admiral Jones took

9 over as the aide to the SECDEF, and it went up once again to

10 let Admiral Jones look at it.

11 Q And a memo copy I think of that was provided to

12 Gen. Arthur Brown, the Director of the Army Staff, Gen.

13 Kavasa, the Executive Assistant to the Secretary; and to

14 Col. McDonald. Is that correct?

15 A Yes, sir, that is correct. It also went to Maj.

16 Gen. Sutter.

17 Q And how do you know that?

18 A Because, sir, I hand-carried that document all

19 around, at Gan. Russo 's request.

20 ^ra And did you also give a copy, or show a copy, to

21 ToJilliylor?

22 A Yes, sir, I did.

23 Q Now in the context of Congressional notification,

24 I believe you told us in April that the day after Tom Taylor

25 gave you a copy of Mrs. Crawford, the General Counsel's,

y?IC«IFIEB

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114

meBorandum to the Secretary on this issue; that you had a
face-to-face session with^^^^^^^^^Vin which you gave him
a copy of the Act itself. Is that correct?
A That is true, sir.
Q Do you recall what you told him?

MR. SAXON: Could we go off the record?

[Discussion off the record.]

MR. SAXON: Where did we leave off?

THE REPORTER: "Question: Do you recall what you
told him?"

THE WITNESS: Sir, the question then was, do I
recall from my face-to-face meeting with^^^^^^^^^lon the
notification issue what was discussed? Yes, I do.

I took a copy of the Act that Mr. Tom Taylor from
Army General Counsel had copied for me to give tol

BY MR. SAXON: (Resuming)
Q Which Act was this?

A This was the 1986 Intelligence Authorization Act,
addressed the requirement of notification to Congress
■ore than a $1 million shipment was involved of arms
outside the borders.

^and I then addressed the fact that it
was really his General Counsel's responsibility to advise
the leadership on the requirements.

!lWiS5IFIED

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115

And, I said, but I don't have any face- to- face
dealings with the General Counsel of the

about a day later, it could have been
the same day again, these things fuzz together, he got bac)c
to me and told me to get out of it, and that the Agency was
handling it. He assured me of that, because I was concerned

about it.

^^^^^^^^^^^l^^^l w i th
^^^^^^^^^^^^^^H with
although a lot of very senior people in the Defense
Department were dealing with the issue, nobody had really
told me it had been done. I said, this is a very important
thing.^^^^^^^Hl said, I don't want somebody to get in
trouble later on it. And he assured me it was being taken
care of.

Q And did you communicate that back to Gen. Russo?

A Sir, as I recall, I did. I'm sure I did.

Q Before we go to the second shipment and any
particulars on it, let me ask you about one or two things
you told us in April.

You mentioned earlier your boss and predecessor,
Lt. Col. Jeffrey Stevens, who I think retired on June 30,

25 1985. You said that he

iKiiHfr"^*

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ONCUSSIFIED

117

Q Also for the record, do you have )cnowledge of any
efforts by the Department of the Army to divert funds or
weapons or ammunition from shipment to any other country to
divert that to the contras in the time you were at DSLOG?
[Pause. ]

A There were never any efforts by me, that I know
about where I was actively involved in diverting anything to
go to the contras — "diverting." I want to be cautious on
that word.

Q Were there efforts by others of whom you had
knowledge?

A No, sir. And I don't want to open a can of worms.

Q And did any of those take place after October of
1984 during which time the Boland Amendment would have been
in effect cutting off all U.S. Government funds in any
naiB*r for the aid and support of the contras?

%. k It is possible that that happened. Once again,
though, because of our large Armed Forces down there in

23 Central America, you know, for me to ship something toi

24 ^^^^^^^^^^^^^^^^^^^^^^^^^^^Hi-n

25 not, could not, and did not have to be construed as an

UNCmFIED

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MR. KREUZER: What's the long title of "MTMC"?

THE WITNESS: Military Traffic Management Command.
It's the Army major command that is responsible for shipping
things entering into the Defense Transportation System,
which is a combination of planes, ships, et cetera, that
covers the world-wide sphere.

MR. KREUZER: And MTMC would provide the —

THE WITNESS: Well, MTMC might provide it. MTMC
again is just the Army leg of a defense system, meaning that
you've got MAC aircraft and Navy vessels all part of it. So
in terms of things I might have been involved in shipping
south for the Agency, they were common, going to known U.S.
addresses through the Defense Transportation System.
V. BY MR. SAXON: (Resuming)

•* Q For the record. Major, is it safe to say that you
had no knowledge after October of 1984 that anything you
were involved wii

671

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121

I would say again for the record that I was never
in three years there ever asked by the leadership of the
Army or the Defense Department ever to do anything illegal;
never.

MR. KREUZER: Can you describe to me the terminal
point at Tegucigalpa which received materiel via the MTMC?

THE WITNESS: Roger, just picture a large port, if
you would, to look at Bayonne, New Jersey, where you've got
ships coming and going. You've got trucks hauling cargo
off. You've got authorized people coming to sign for

Typically, if we ship something down there, it was
care of the U.S. Embassy. That was a typical address to
ship things care of. Also, some of the shipments went care
of U.S. MILGROUP.

MR. KREUZER: Do we have a command there at the

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oiUSSIFIED

1 port?

2 THE WITNESS: You've got a representative down

3 there. MTMC is represented down there by an office. Again,

4 I don't know the details of how it's constructed, but

5 Military Traffic Management Command has an office for

6 southern command down there. Exactly how it is staffed and

7 operated, I don't know.

8 MR. KREUZER: And that is located in a port?

9 THE WITNESS: I don't know where the office is in

10 terms of where the office is in Central America. I know I

11 used to have an AUDAVON number to call the Colonel if I had

12 any problems with the Port. Also, he would call me if he

13 was having problems. But in terms of for me to say today, I

14 don't know precisely where the office is.

15 MR. KREUZER: What are the names of some of the

16 people down there with whom you would speak from time to

17 time?

18 THE WITNESS: I would have to go back and look at

19 my notes. In my notes, there is a record of the Colonel.

20 ^11^^^ °"^ single point of contact I dealt with exclusively,

22 MR. KREUZER: But you don't remember his name?

23 THE WITNESS: No. I know he was a full Colonel,

24 and he was the MTMC Southern Area Commander for Southern

25 Command in the '84-85 time frame. That should be easy for

'smmm

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NWSIFIED

1 somebody to track down.

2 MR. SAXON: Let's go off the record a second.

3 [Discussion off the record.]

4 BY MR. SAXON: (Resuming)

5 Q Major, if we can now, let's focus on the second

6 TOW shipment. I believe that on February 17 you got a call

7 f rom^^^^^^^^H who said to be ready for the second

8 shipment within the next couple weeks. Is that correct?

9 A Yes, sir, it is correct.

10 Q And did you then call Col. Lincoln?

11 A Yes, sir, I did. This was a smaller shipment this

12 time. Dave only wanted about 500 missiles this tine.

13 Q Was it "about 500," or was it 508?

14 A It could have been. I think it was 508.

15 Q And when you called Col. Lincoln, did you tell him

16 you needed another shipment of widgets for Project Snowball?

17 A That's precisely the words I used with Col.

18 Lincoln, sir. Col. Lincoln's main concern at this time was,

19 keeping in mind we already have all this history behind us

20 ofaill this trial and tribulation on pricing and

21 adidEltlcations on widgets, and he says: Chris, he says, my

22 main concern is this guard force, he said. Are we going to

23 be able to lift off? He said, I would rather you get do*m

24 to the point where you know you're going to take delivery on

25 them within 48 hours and, he said, I'll bring them up here

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1 just before the delivery.

2 Q Had he concluded that he could get the TOWs to

3 Redstone in three days?

4 A Yes, sir, he did.

5 Q So he was going to wait, really, until three days

6 prior to the delivery date?

7 A Yes. It turned out, though, that we had them up
3 to a little bit longer than that. He was concerned about
9 glitches, and he got them up there a little bit earlier.

10 But the second shipment was set up precisely as the last,

11 except with one difference.

^mm^m^^^^^did me to try to get MAC

13 aircraft. He decided that the cost for the ground

14 transportation was so cheap compared to the use of a MAC

15 flight, that he said economically it made lots of sense, as

16 long as we had the two-day notice, for follow-on

17 transportation.

18 ^^^^ So he built the driving time from Redstone ^o^^H

19 ^^^^^^^into his factoring when he started negotiating for

20 fe^ow-on transportation^^^^^^^^^Hfor the second

21 shl^nt.

22 MR. SAXON: Let's go off a second.

23 [Discussion off the record.]

24 BY MR. SAXON: (Resuming)

2 5 Q To go back to the number of 508 missiles, did you

UNCIil^inEO

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125

why there was such an uneven, or

1 ever inquire

2 curious number?

3 A Yes, sir, I did.

4 Q And what did he tell you?

5 A The answer was that they were working from a fixed

6 sum of money, and that was how the numbers had worked out.

Q ^^^^^^^^^^H told you, then, at some point to

8 Baggett Trucking again for this shipment. Is that right?

9 A Yes, sir, he did. As a matter of fact, that was

10 early on in the second equation.

11 Q And did everything go down on the second shipment

12 more or less as the first, except for the fact that there

13 was no Agency representative present?

14 A There were two other factors. The second shipment

15 was identical to the first, with these major differences.

16 One is that we were delayed nearly six weeks before we

17 executed the second phase. It was into early May, as I

18 recall, around the 13th of May. It may have been a little

19 bit later, but early in May.

20 The stress!
^^^^^^^^^^^^^^f was that one day at a time were being

22 moved forward — tomorrow we're going to do it; tomorrow we're

23 going to do it. We'd fall through. Tomorrow we're really

24 going to do it. That had been a lot of stress on us as we

2 5 moved forward the six weeks from late February to early May.

UNCIA^IFIED

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126

1 But in terms of the execution of it, the execution

2 of the second phase went very smoothly indeed. I by now had

3 orders to leave DSLOG and go to Denver. I had set it all

4 up , though . I had made the same arrangements with^^^^^^^H

5 ^^^^fthat I had previously. Colonel Armbright out of my

6 office went down to watch the loadup and see the execution

7 of it, and there is a lot of paperwork to handle when you're

8 acting as the consignor for tons of explosive shipments.

9 Q This was Col. Larry Armbright?

10 A Col. Larry Armbright.

11 Q What was his position?

12 A He was called the Logistics Accounts Coordinator

13 in DSLOG.

14 Q And once you left, did Col. Armbright more or less

15 take over and do the things that you'd been doing on

16 Snowball?

17 A He did on the third shipment on Snowball, sir.

18 Crocus was essentially finished, except for a very few small

19 hang-on details when 1 left. But Col. Armbright fully

20 ajd^rutcd the third phase of Snowball after my departure, and

21 h« *«x«cuted the on-ground phase of the second part.

22 Q And he went down, I think you told us before, on

23 May 19th to Redstone?

24 A That is the correct date, sir. I had said earlier

25 the 13th, but I meant the 19th.

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Q And was there any reason why an Agency
representative did not go that time?

A They begged off; plus, we already had their funds'
certification up front, and they had agreed to sign a
document as soon as Col. Armbright got back. The DSLOG
leadership had no problem with that, since everything had
worked smoothly the first time.

Q On the first shipment when the Agency
representative went down, what kind of credentials did he
have?

A Sir,!

Q So if we talked to anyone in the course of this
investigation at Redstone and they saidl

Q Now did you get a call from Col. Armbright on the

leiiOTED

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128

morning of May 20th telling you that everything had gone
okay?

A Yes, sir, I did.

Q And that meant that the missiles had departed by
truck to —

A With no incident, yes, sir.

Q — towarc

Now did this end your involvement with the TOWs,
except for the billing?

A Yes, sir, it did.

Q And more or less at this point. Col. Armbright
took over and handled the third shipment of TOWs.

A Yes, sir, that's correct.

Q The charges from MICOM that had to be paid back
before you left came to approximately what amount?

A Sir, as I recall, about $5.5 million.

Q Would $5.6 million sound about right?

A Yes, sir, it does.

679

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132

Q Now do you have any )uiowledge of what actually
transpired with I guess the first and second shipment of
TOWS, and any shipment and payment for the HAWK repair parts
before you left in terms of getting monies from the Agency
to the proper command?

A Sir, the HAWK parts were not paid for when I left.
They had been shipped and received successfully.

Q So let's confine your answer then to the TOWs, the
first and second shipment.

A I did receive payment for the first and second
shipment of HAWKs from the Agency. What happened was, as I
got closer to departing, I kept calling Chris Leachman. He
finally got me a bill together for this roughly $5.6
million, which covered again the costs of the missiles and
the ancillary costs MICOM billed us for.

I hand-carried that bill over to^^^^

and he

said, I will have checks for you within just a few days, and
h«9ttd. And he asked me to come over and get those from
hflR^ I

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134

Now to your knowledge, did MICOH ever receive
their $5.6 Billion?

A As a matter of fact, they got it very cpiiclcly;
because from the day that our classified courier hand-
carried the checks over — this was all within a couple of
weeks of me getting the bill until we had the payment back
from the Agency — within 30 days of Chris Leachman presenting
us his bill, we had the checks on their way to MICOM. I
know they were received, because before 1 left DSLOG in late
June of '86, and they were billed in late May, they bad ,
their money down at MICOM,!

Q And when you left in late June, that would be the
extent of your knowledge?

A That was the extent of the monies that had been
paid to us, and I did know it, because until I left I
exclusively handled the billing and the payments.

Q But whether those checks were properly deposited,
th«y were properly —

Don't know. But I know that they have
lily arrived down there prior to my departure.
MR. SAXON: Okay. I'm ready to go to the HAWK
repair parts.

Roger, do you have anything on TOWs?
MR. KREUZER: No.

it i1^t,nvUi5

683

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135

BY MR. SAXON: (Resuming)

Q On the HAWK repair parts, as I understand it in
early March of 1986 Gen. Russo called you up to his office
and introduced you ^°^^^^^^^^^m ^^ ^^^^ correct?

A Yes, sir, that is correct.

Q And how did he make that introduction to you?

A He said, Chris, this isj

So he said, "This
Now he is in his office, the ADSLOG's office.
"Chris," he said, "We're going to follow the same rules on
this project that we did on Snowball." He said,!

though, this time has a list for us of a whole bunch
of things that we need your help with."

Jl And he physically had in hand the list of what?

Which he handed to me, a list of 14 Xeroxed pages
b««Ji field-typed by somebody — when I say "field
typed," because the typing was a little erratic, a lot of
misspellings, and skipped spaces; it was not a professional
piece of work. But there was no agency stationery listed.
It was plain bond paper with typing on it of stock numbers,

UNCUSSiFIED

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136

1 n^lKlatures, quantities, and prices.

2 ' Q Do you recall how many line items of repair parts

3 there were for the HAWK missile?

4 A I want to say, sir, there were about 248. I know

5 that at the end the numbers varied between 235 and 2 50 as we

6 massaged the list. And again. Gen. Russo explained the

7 rules. No paperwork. The recjuest is going to come over.

8 No written staffing memo. And the urgent requirement on

9 this one, which was almost impossible, was that we give

10 ^^^^^Hback an answer within two days: Could ve support all

11 those things on that list?

12 Q So you were asked to ascertain within 48 hours

13 whether the Army had and could supply these 234 items?

14 A Yes, sir. A brief transcription of what followed

15 that same day. This is probably early afternoon. I went

16 down to my office and by 4:00 o'clock that day Col.

17 Armbright and I had figured out that at least eUsout 14

18 different Army and DIA Commands were involved, and we said

19 it,.)q^„*'3*olutely Impossible to deal with so many different

• " ■■<■

20 ii^H^in such a short time.

21 '^^^B^ ^^ that point, I made the decision to go to the

22 major' command level. Again, even though Gen. Russo's

23 guidance was "minimum number of people," I just decided that

24 the time frame was so compressed — and I went up to tell Gen.
2 5 Russo I was doiilGLilaaJti, I told him that I had gone to a

685

137

trusted point of contact at DLA,

Q DLA is the Defense Logistics Agency?

A Defense Logistics Agency. They're headquartered

at Cameron Station, Virginia.

And you went also to AMC?
To a gentleman,!
And AMC?
Yes.

And that stands for Army Materiel Command?
Yes, sir. It's the Army Materiel Command. These
are the two principal commands in the Amy, in the defense
agency, for managing materiel at the major level.

Q Okay. Before we get into those discussions with
the individuals at DLA and AMC, let me back up. When you
were meeting with Gen. Russo anc^^^^^^^^^H did|
tell you who your point of contact would be at the Agency?
A Yes, sir, he did.
Q Would that also have beer
h Yes, sir, it was.

Did you say anything to^^^^^^^^labout the use
airlift on the HAWKs and whether anything needed to
be done differently?

A Yes, sir, I did. As a matter of fact, once he had
identified to me that^^^^^^^^H was the action officer, I
immediately the*|«jr#M:eA ttnii'MrtlAnL"*' the tarnished

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8
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138

relationship that the Army had created out of my office with
MAC, and said that I wasn't anxious to damage these points
of contact again, and that in fact MICOM — or that MAC
legitimately had complained about the way we had processed
this.

said,^^^^^^^^^^^^^Btold me was

the issue. I said, can we do better this time? I said,
because if we're going to need MAC — and again that was the
scenario, that^^^^^^^^f f elt we would be using MAC at some
point in the process, I said, we had to do a lot better. I
said, we could not afford to continue to damage the
relationship by faulty planning. And they said they would
do better. That is more or less how we left that that day.

Q All right. When you contacted the folks at DLA,
you you with^^^^^^^^^^^^^^^^^^^^^^^^^H Is
that correct?

A Yes, sir, that is correct.

Q And did you contact an operation there at OLA
callec^^

A Sir, that's not quite the right word. It's called

Q And then at AMC, the Army Materiel Command, you
contacted|d|i:|.)niiiari^^^'th£._name of J

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139

AMC. That's such a giant
headquarters, I thought I'd narrow you down to where he is
out of the thousands of people there.

Q But ultimately, I believe you dealt on a day-to-
day basis with two other individuals at AMC. Is that
correct?

A One other individual at AMC headquarters, sir, and
two other individuals at MICOM. The other individual that

11 picked up the mission fromi

Q And were the other two individuals John Chapman
and Bill Reyer, R-e-y-e-r?

A Yes, sir, they were, at MICOM in the HAWK Project
Manager's Office at MICOM.

Q At Redstone Arsenal.

A Yes, sir, at Redstone Arsenal.

Q And did you give these individuals the list and

24 tell them to start working the requirement?

25 A Yes, svi-. .Qli^ ^ i^A '^£fy short time constrain/^.

DNWn

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140

1 I wasn't able to have nearly the tight control over

2 paperwork I had on the previous mission. I gave Xeroxed

3 copies of the lists to both DLA Headquarters and to AMC

4 Headquarters, and what AMC did that same day that I had got

5 the list is they Data-FAX'd a copy of it down to MICOM

6 Headquarters. A Data-FAX, for the record, is a telephone

7 transcribing system that gives you an almost exact copy out

8 of the telephone wires about 15 minutes later.

9 Q And I believe you physically went to AMC and Col.

10 Armbright physically went to DLA?

11 A yes, sir. We split the mission up again.

12 Q And what instructions did you give to any of the

13 people with whom you dealt in terms of how this was to be

14 done, records, number of people involved, et cetera?

15 A Well, I couldn't give the same instructions to AMC

16 that have been given to me. I tolc^^^^^^^^^^Hthat we

17 wanted to limit the number of people to the absolute minimum

18 number possible. I said, let's consider this matter

19 classified at the Top Secret level, I said, but we have to
2 0 handle some of it as a white world mission. And that was

21 how we decided to hand it.

22 Again, those operational decisions day to day were

23 mine. It was easiest to protect the materiel by pretending

24 that this was a regular, normal white world operation; that

25 there was a li|^ pJ^J-tems^thatAMC needs, not tying it to

mmm

689

141

1 DSLOG right away, just get down there. We need inunediate

2 capability to assess this list of items. That's how it was

3 done, as a white world type action. Although^^^^^^^^^^^^f

4 understood that the entire operation was a highly classified

5 operation.

6 Q I believe you told us in April that within 48

7 hours Chapman and Reyer had identified all but 20 items on

8 the AMDF. Is that correct?

9 A Yes, sir, that is correct.

10 Q And did Simpson — excuse me, did you then call

11 ^^^^^^^^^^H within 2 4 hours saying that you could meet the

12 requirements but you would have to revise some of the stock

13 figures?

14 A Not only some of the stocJc figures, sir, but some

15 of the prices as well. It would appear that some of the

16 prices that the fellows had were years old, and there were

17 some very material changes in the prices on several of the

18 items. ___^_______

19 Q Did you ever ask^^^^^^^^H where he got his

20 list?

21 A Yes, sir. That became of material interest

22 because Mr. John Chapman, the technician, technical engineer

23 we will call him, at MICOM was very concerned about it. He

24 said, based on the list that had been provided, he said, he

25 kept detailed ,i;fip5rds on all sales of HAWK missile systems

igMcords on all sales or

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142

1 to all U.S. customers worldwide. He said, based on such an

2 extensive list, he thought that other parts, too might be

3 near the end of their useful life. He said if I could give

4 him the serial numbers of the systems, he could look them up

5 on his records and provide us even better support.

6 He was concerned when I would not give him that

7 data. Obviously I went back to^^^^^^^^^Hasking for it,

8 and he simply would not give it to me.

9 One other issue, too. Unlike the first project
where they did yield to prices, ^^^^^^^^^^^^H on the

11 second project that money was an absolute tight constraint.

12 There was a fixed amount of money for the project. And as

13 the prices had gone up on some items, some of the investing

14 that^^^^^^^^^^Hand I did on widgets, there's 239

15 different lines items, had to do with some items cost more

16 than he had originally intended. And some of them got cut

17 down.

18 That happened. There were other items that were

19 cheaper. All of that entered into the equation.

20 Q Now is it correct that with the people you were

21 working with, ultimately all but seven items were

22 identified? Does that sound right?

23 A Sir, that does sound correct, to the best of my

24 recollection. Some of the items have simply been typed in
2 5 there. I had some generic nomenclature on the list that

mimm

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1 ^^^^^H had given me. Between the nomenclature and various

2 parts of the stock number, Mr. John Chapman, through

3 excrutiatingly detailed detective work was able to put

4 together the right part by process of elimination.

5 Q Did Chapman and Reyer ever ask you if a customer

6 was actually going to use this stuff?

7 A Yes, sir, they did.

8 Q And what did you tell them?

9 A As a matter of fact, I believe that I told them

10 that we were going to use this, and use it right away, and

11 that it had to work. It had to be in condition Code Ac.

12 That was the issue.

13 Q Let me ask you about propositioning at one

14 location. You indicated these items in the inventory were

15 scattered around at different depots. Is that correct?

16 A Yes, sir, that is correct.

17 Q What was the prepositioning issue?

18 A There were two issues. First of all, the real

19 reason for the propositioning was that I felt, having talked
2 0 ^°^^^^^^^^^B that he was only going to get two days'

21 notice again, like we had on the phases of Snowball.

2 2 Having had two three years of experience at this

23 business, I realize that with — I think we had nearly 27

24 different locations involved, and that was 27 different

25 locations belonging to I believe 9 different major commands

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1
2
3

of the Army and the Defense Department.

Q Was there that one Air Force Command involved?

A Yes, as well. In addition, and I felt that that
was certainly going to test Murphy's law terribly if we
tried to get that successfully done in 48 hours.

recommended ^°^^^^^^^^^^^^^^| that
preposition. I said, I'm going to need money to do that.

Q And that simply means to consolidate them all into
a single location?

A Yes. My plan had been to consolidate them. I had
tried to find out fron^^^^Bwhere we were going to ship
things out of. He was very close-mouthed, but he finally
consented to the fact that, well, somewhere arounc

The issue on the propositioning was this: I want
to see^^^mH^^^HHto ask him if he would fund this
effort. Now keep in mind, I have no letter yet certifying

2 5 funds.

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1 Q Was that the reason you did that, because DLA

2 insisted that they would not preposition unless they had

3 funds?

4 A Well, yes. But the Army wouldn't, either.

5 Neither of the two agencies would. The Amy AMC

6 headquarters wanted a certification from me that I would pay

7 this bill, and I had told John Chapman and Bill Reyder that

8 based on other dealings I had had with the people I was

9 dealing with, that we could get delayed on this weeks at a

10 time.

11 Well, once the costs are incurred, somebody wants
to bill .^^^^^^^^^^^^^Hagain a gentleman word,

13 promised me that even if the mission aborted he would

14 provide me our expenses covered for the Army activities. He

15 said, I'm not going to pay you for the daily activities.

16 And, he said, since they won't do it without a specific fund

17 site — AMC was willing to do the work without a specific fund

18 site as long as I certified the ability to pay the bill.

19 Again, because I was dealing with long-time

20 contacts, they trusted me. DLA would not do it without a
fund but^^^^^^^^^^^^Hdid agree to do he

22 could. What he could do was that each of the DLA depots he

23 had the items at that depot segregated on a pallet and
2 4 marked for my special project.

25 Q So the repair parts were prepositioned in

UNCLASSIFIED

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2 A For all of the Army spare parts which, I might

3 mention, was a large chunk of the materiel. The DLA part

4 was a smaller portion both in dollars and volume.

5 Q So they were not propositioned, but they were

6 separated out —

7 A And in fact, sealed up in plastic and everything

8 else. They were basically ready to ship. That was a lot of

9 work.

10 Q And when the parts were prepositioned, were there

11 some items that had not arrived?

12 A Well, they the parts were propositioned, to start

13 with as we prepared to proposition, we found out that items

14 that had been listed on DoD inventory records, keeping in

15 mind that you're going to look at a record one day, and

16 records are made as of cutoffs, that some of the items that

17 other items had come in or gone out of the shelf since the

18 last inventory update, and we had to change some other

19 quantities and figures based on what we were finding on the

20 shelf as we pulled things.

21 That wasn't the last preposition. That wasn't the

22 last change, John.

2 3 Because once we determined what was on the shelf,

24 I made up a list for Gen. Russo of critical items. John

25 Chapman and Bill Reyder talked to me at length about Army

UNCWSSiFlEO

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1 capability to have another item manufactured, and what was

2 the average demand time.

3 So, for an example, I might list an item that the

4 Agency may have asked for three of widget X. Widget X is

5 only used once a year by the Army. So we would give two

6 away and keep one, because we felt a year was long enough to

7 obtain some more items for the stock.

8 Q All right. Let me ask you a question or two about

9 readiness, then. Did there come a point at which you put

10 together a matrix on readiness, with availability in the

11 inventory, manufacture time, and so forth?

12 A Yes, sir, I did that. And I kept detailed notes

13 on that in my office. The list is a working, worn-out

14 document at this point, but it is still there for the

15 record. It shows how the numbers changed, and we lined

16 things through, and marked "not available."

17 Other items we substituted, as I recall, or

18 provided higher assemblies on probably 10 percent of the

19 items. The Agency did pay us our asking price for the

20 higher assemblies as the replacement item.

21 So besides the seven that we couldn't find — sir,

22 it was a very dynamic list.

23 Q Let me ask you about Pre-Phase II PIP configured,

24 or product improvement program conficfured HAHKs versus the

25 issue of interchanqeabiJlity^^^)Bb.ua|igycplain that a bit for

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1 me?

2 A Sir, the term Pre-Phase II configured was a term

3 used by MICOM to describe generically all of the parts that

4 the Agency was asking for. The Phase II Product Improvement

5 Program at MICOM took the Army HAWK missile system and gave

6 it modern electronics, and a much more accurate guidance

7 system, radar guidance system.

8 Q Now the HAVnc system, for the record, essentially

9 involves three things, as I understand it: the radar, a

10 pilot system, and a computer. Is that correct?

11 A Yes, sir, that is correct. Plus the fourth part,

12 the missile itself.

13 Q Continue, then, and tell us about this

14 modification.

15 A The modification is very important in

16 understanding this whole project. Project Crocus, because

17 when the electronics were changed on the HAWK missile system

18 and the electronics were completely overhauled, cables,

19 sizes, whole subassemblies and major assemblies were pulled

20 out and replaced by whole different items.

21 The end result was that after the Phase II Product

22 Improvement Program was done, and you have a system now

23 called Post-Phase II configured, you could no longer take

24 hundreds of your repair parts that fit in the old system and

25 put them in the new system.

UNCLASSIFIED

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149

1 Q Now this was not true of all parts, but it was

2 with some?

3 A A majority of them. A majority of the parts now

4 were new state-of-the-art products, and the new ones also

5 would not fit in the old ones. It was because the

6 electronic configurations themselves were changed.

7 When the subject came up of asking for Pre-Phase

8 II PIP configured items, MICOM offered to retrofit. That

9 is, for the layman, bring all of the old systems back to

10 their depot at Letterkenny, overhaul them, and for the sum,

11 as I recall of about $600,000 a system completely overhaul

12 and bring up to state of the art, and plus they offered at

13 the same time to go over the entire system and check the

14 useful life of all the parts to make sure that we basically

15 had a completely Class A condition code system.

16 Q And in fact was it not the requirement that we

17 were trying to do that for all of our allies who had the

18 HAWK system?

19 A Yes, for two reasons. One is to bring all of our

20 folks to state of the art. Two is to reduce the terrible

21 expense of inventory that was being caused to be maintained

22 in two separate inventories for two different systems. Plus
2 3 the newer one obviously gave the owner a capability to have
24 a better defense.

2 5 Q Did you ever go to^^^^^^^^^H with this proposal

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150

1 that the entire system be reworked?

2 A Oh, yes, sir. As a matter of fact, we studied

3 that carefully enough that we even offered him a specific

4 time that it would take. He came back and absolutely

5 rigidly declined that.

6 Q Now if I understand what you're saying, the

7 proposal from the people, Mr. Chapman, Mr. Reyer, others

8 with whom you spoke, was that for not a whole lot more money

9 the entire system could be rebuilt, rather than simply

10 tinkering with it with some of the old parts that were

11 provided by the Agency?

12 A Yes, sir. And Mr. Reyer had another concern that

13 fit in with this. He felt, based on the list provided, that

14 whoever had put it together didn't know precisely what they

15 were doing, because he felt too many of some parts had been

16 requested, but not enough others. Some of the parts that

17 had been requested he said would have indicated that another

18 part had failed, but he said they didn't ask for that part.

19 And he was concerned that we weren't going to get a good job

20 done based on the list that was provided.

21 Q Did he tell you that whoever put the list together

22 lacked technical capability?

23 A Yes, sir, he did. Mr. Chapman, who is an

24 engineer, told me that.

25 Q And what did^^^^^^^^H tell you when you went to

lat did^^^^^^^B

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151

1 him with this proposal?

2 A Well, to start with, John, at the time that I went

3 ^°^^^^^^^|B ^^ ^^^ list, and this was after Mr. Chapman

4 had told me that he felt it wasn't technically proficient,

5 we asked him to go back and have it reviewed at the source

6 of origin, and asked him if we — we even offered to provide a

7 technician to go to the site to look at it, and that also

8 was declined.

9 John Chapman felt that one of their expert

10 technicians would do a better job than whoever had put the

11 list together. ^^^^^^^^^H declined that, and told me at

12 that time that he had no capability to go back to the source

13 of origin and get the list modified.

14 We were still concerned at that time about the

15 missing seven items that we couldn't identify. We didn't

16 know whether they were critical, or not a critical part for

17 the record. It is a part that you have to have to fire the

18 system accurately, and you can only be missing one critical

19 part and a whole system won't work properly.

20 So we were very concerned about the seven missing

21 items that we couldn't identify, not knowing whether they

22 were critical or not. But we clearly established that we

23 had no means^^^^^^^^^H^B to go back to the of

24 origin and get the list modified or corrected.

25 Q And did Chapman actually ask you for the

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1 destination so he could then look up the stock numbers of

2 the user's system and know what parts would be useable?

3 A Yes, sir, he did do that, and that was declined.

4 Q And did you also ask^^^^^^^^^l why you couldn't

5 just provide the customer with new parts?

6 A Yes, sir, I did.

7 Q And what was the response there?

8 A The response was that he wasn't interested in

9 that. There may have been more, John, now but that whole —
10 we had that conversation as clear as a bell, but all of the

details — as recall, to help^^^^^^^^H|^^V was telling

12 me was that they had Pre-Phase II PIP configured radars, and

13 that these were to replace broken items or damaged items,

14 and he intended to use them as they were and didn't want to

15 wait. That was the issue, the waiting time.

16 As I recall, it was six weeks a system, although

17 they could do several at once, to modify the radar systems

18 at Letterkenny after receipt of shipment.

19 Q Let me ask you a question about the pricing on the

20 HAWK repair parts. Did you instruct Chapman and Reyer to

21 follow the standard price on all parts with the idea of
2 2 being that neither the Army nor DLA lost money?

23 A Yes, sir, I did. As a matter of fact, that was my

24 general guidance to both MICOM levels, and we let them

25 manage. The data fed up through their lower commands to the

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701

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1
2
3

major headquarters, and then we went over and picked up the
prices that they provided to us.

Q And you paid the prices the commands gave you,

A Yes, sir. But when we say "we paid," we preferred
fund certification in a message that I wrote myself in April
that certified to the commands every penny, and we provided
specific fund cites.

I do know that at the time I left, we had not been
billed. I am further aware that even when I came back to
first testify to the FBI, that we had not yet got a bill
from either of the Commodity Commands for the items shipped
on Project Crocus.

Q On Crocus, dic^^^^^^^^^Htell you to wait until
everything was priced out before he sought to get the funds?

A Yes, sir. I might mention that in the early days
of this project^^^^^lwas keeping up with me. I was also

to him,^^^^^^^^^^^^^^H about the
environment every day where some times are not on the shelf,
some substitute, some hire assemblies.

He said, I'm not even going to go for it. He
said, I'm just going to flat tell the people I'm dealing
with, ^^^^^^^^1 and Company, that we're not ready to take
delivery on this until you get more concrete on where we
are. It was kind of at the point where I had items
prepositioned at Redstone Arsenal ,^^^^^^^^^^H and at the

UNCLASSIFIEO

702

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154

1 DLA Depots, and we had counted items and priced them that

2 then we got pretty close on the price.

3 He did bring to me before we made the shipments

4 the funding authorization for all the money that I had asked

5 him for, plus about 3.5 percent of the gross total to cover

6 a statutory Army requirement which covers packing, crating,

7 and handling costs, which he objected to paying, but he paid

8 anyway. So he provided us early on, and it is no fault of

9 the Agency that the bill had not been paid by November.

10 Q Did you ever have a discussion with Tom Taylor of

11 the General Counsel's office regarding Project Crocus and

12 the amount of money involved, and Congressional

13 notification?

14 A Sir, I'm sure that we did.

15 Q I believe what you told us in April was that Tom

16 Taylor told you that because the amount involved was greater

17 than $4 million, then the Congressional notification issue

18 that had been discussed on Snowball would also be operative

19 with regard to Crocus.

20 A Yes, sir, that is what I recall I told you.

21 Q And do you remember talking to^^^^^^^^^^Blf about

23 A Yes, sir. The modus operandi^^^^^^^^^^His that

2 4 Crocus was going to be handled^^^^^^^^^^Hthe same way

2 5 Snowball was.

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1 Q «nd do you know if Gen. Russo again raised the

2 issue with Gen. Powell?

3 A Sir, as I recall, he did do that. Except that by

4 this time, or right in the time when I'm a little fuzzy,

5 Gen. Powell was getting ready to leave and Admiral Jones

6 took over, and he may have discussed this with Admiral

7 Jones. I know he went up to speak to the aid to SECDEF.

8 Q The military assistant?

9 A Yes, sir.

10 Q and the word came back that the Economy Act

11 governed these transactions, and the customer would notify

12 the Congress?

13 A Yes, sir, that was true.

14 Q The customer here, the recipient agency being the

15 CIA?

16 A Yes, sir, that is true. And that did come back

17 from the military assistant to the Secretary.

18 Q Let me ask you what your reaction would have been

19 if you had known that the ultimate destination of the HAWK

20 repair parts was Iran?

21 A Sir, as I told you on earlier missions, because of
my with^^^^^^^^^^^^^^l and the people we were

23 trying to arrest that were selling things to Iran, I would

24 have — I am convinced that if Tom Taylor and the General
2 5 Counsel had known that, he was very, very careful about

UNCLASSIFIED

704

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guarding the interests of the Army and me.

and I feel strongly
that the minute that he would have )cnown about it, he would
have been the first guy besides Gen. Russo that I would have
told. And I feel that, had Tom Taylor )cnown that, that the
course of events would have been different.

Q Let's go back to the issue of readiness and ask
you whether there was any depletion that would have been the
result of meeting the requirement on HAWK repair parts,
total depletion from their inventories?

A Yes, sir. Some number of items that the Agency
asked us for were not only in very low balance, but they had
asked for a very low number. And again, when I met with
Gen. Russo, John Chapman at MI COM had estimated they were
trying to re fit^^^^^^H systems.

Let's take the example of ^^^^^^^^^^^^^^H one
of the items I recall that they asked for. This was an item
you had to have to fire the missile system successfully. So
then we had to make a decision, if we didn't give it to
them, where are they going to be able to fire it? And
obviously there wasn't any point then in giving them a whole
host of items for "a" system, if they wouldn't give them the

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1 one thing that they had to have to operate it.

2 So criticality did drive both what we were willing

3 to support and what we didn't give them. We did cut down

4 some critical items that were necessary not to deplete the

5 entire stock, but it was a very complex matter. We did

6 reduce the stock we provided on many items.

7 On some, as we discussed in April, after we

8 reduced the number we were going to give them, after an

9 appeal on their part, we raised some of them back up

10 somewhat.

11 Q That was the appeal b^

12 A Yes, when he appealed. We didn't do that on all

13 of them. On some of them we were just flat out that we

14 wouldn't do that.

15 Q And were there some items that|

16 did not take because th^y were more expensive than the

17 initially requestc „em?

18 A Yes, Sii., any number of items. That was driven by

19 the fact that he did identify to me, after we had done all

20 his work and we had priced out the stuff, he'd come back

21 with a list for me one day which should also be in my

22 records, his working list, where he had chopped off the

23 quantities I had offered and provided a reduced quantity.

I said|H^^^^^^^^^^^^^^^^^^^^^^^^B I

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UNCIASSIFIEO

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1 telling me to change again. I was having visions of the

2 same sort of snarl in Snowball. He said, Chris, it's

3 simple. I have a flat fixed budget on this and, he said, we

4 have to stay within the total dollars that I had when I

5 started. And, he said, I have a few more dollars than the

6 total package when I started, he said, but as prices have

7 gone up and down on the replacements and the subassemblies,

8 he said, I've had to alter the quantities.

9 Q So it was your understanding that he had an

10 absolute ceiling of money?

11 A Yes, sir. It was very clear on this particular

12 project.

13 Q And I believe you told us in April that when the

14 amount got up to over $4.1 million, he started getting

15 excited?

16 A Yes, sir, that is true.

17 Q So would you take it that that was the amount of

18 money that he had? That was the ceiling?

19 A Sir, knowing how those folks worked, he might have

20 had another $15,000 to $50,000, but I doubt he would have

21 had any more than that. They normally when they were

22 estimating Army support knew that our incremental costs were
2 3 unpredictable, and they would normally add a certain

24 percentage to account for variability.

25 Q I'm not sure if I asked this before. I do
il

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2
3

2 0

2l|

understand that you told us that the price list, or the list
of items that^^^^^^^^^Hinitially gave you came from
overseas. Did you ever ask^^^^^^^^^^^^J overseas? Or who
prepared it?

A Yes, sir. That issue surfaced early on in the
first few days of the Crocus Mission, because we couldn't
read some of the items. It tooks hours and hours and hours
that really the Taxpayer paid for, I say that because
whether the Agency paid us or MICOM paid us, John Chapman
who's an engineer and his assistant Bill Reyer are both
engineers. These are highcut individuals who spent many
hours deciphering through detective work this list.

708

UNCIASSIFIED

^aJ/BV Ja)

UNGIASSIHED

709

The other issue was that I had never heard the
White House's name mentioned in the three years I had been
at DSLOG as controlling the decision on funding on a
project.

710

Did you ever get into the issue wit^

about how the Agency was going to price these
items once they left the Agency?_
A No, sir.

Q So just for the record, no one ever told you that
the White House was going to take the HAWK parts, for
example, and simply multiply by 3.7 to come up with the
figure that they would use for the pricing?

A No, sir, I am not. I am certainly aware of it
now, having read the papers and watched the news, but at the
time it would not have entered my head. That was one item
that did not, that they were going to resell the stuff.
That was not their basis of operation.

Q And to close the loop on the HAWK repair parts,
they were transferred to "kelly Air Force Base? Is that
correct?

A Yes, sir. All of them were, initially.

Q And then they were transported tc

A By truck, yes, sir.

Q And did you ever get a call from^^^^^^^^H saying

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166

1 that everything had gone fine and they had lifted off?

2 A Yes, sir, I did.

3 Q Now let me ask you about —

4 KR. KREUZER: Can I?

5 MR. SAXON: Sure. ^-— _-«-.

6 MR. KREUZER: Again on this call froni^^^^^^B when

7 did he call you?

8 THE WITNESS: Sir, without my notes--it's been

9 enough months now--I would just have to tell you that

10 generically based on the date that we executed this mission,

11 we had two days, which we actually took about three-and-a-

12 half when we were all said and done — even at the end,

13 Murphy's law worked against us a little, and even with the

14 prepositioning we still had eight different locations, seven

15 at DLA and Redstone to deal with, and there were still, as

16 we counted, a few items that didn't get to the assembly

17 point. So it took us until about the end of the fourth day

18 to get it all assembled atl

19 And whatever day that was from — and I have a

20 message in ray records, John, that you could look at that

21 gave the execute date and time. I don't remember what the

22 date is, but it's called "Support of Project Crocus." That

23 was the same message that certified the funds, and it also

24 listed everything we were asking for. The prices that are
2 5 in that message are the prices that have been fed up to us.

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167

It was about three days after that, Roger, that we
got a call fromH^^^^^^^^^Hto tell us that everything
had gone successfully. He declined to tell me how they had
left.

Once again I think, just in the news that has been
made available to me as I've watched the testimony, it would
appear as though I didn't get the whole story on how they
left^^^^^^^^^^H because I was told that we were not using
Defense assets, and that appears not to have been the case.
BY MR. SAXON: (Resuming)
Q Let me ask you about the HAWK radars. I believe
you told us in April that the ANMPQ-48, the two radars that
were requested on this initial list, werel

^^^^^^^^^^^^^^^^^ Is that correct?
A Yes, sir.

Q And what was the price of one of those radars per
item?

A Sir, as I recall on the old one, and there's two
different numbers that come to me months later, one is
ANMPQ-46. I think the 46 was the earlier version, the Pre-
Phase II PIP configured radar, and that the 48 was the later

25 version.

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3
4
5
6
7
3
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

UNCLASSIHED

168

The older version was about $3.6 million a copy,
as I remember. I can tell you almost anything you want.
That was a very interesting saga as we went through that.

Q AS I understand, the radars were not on the
initial list itself. Is that correct?

A No, sir, they were not at all.

|^^H|^^^^HI|^^^HPsaid he to
in essence, $7 million worth of radars. Is that right?

A Yes. And I was benefited by two pieces of advice.
I went up to seek advice from my old friend Tom Taylor. I
said, Tom, tell me about this. And he said, Chris, for that
amount of money, he says, you can't consider that part of
the same request. He said, we've turned repair parts into
multi-million dollar end items. He said, I think you need
to tell Gen. Russo that this ought to be a separate request,
so I want down to see Gen. Russo. He said, you
|||^^l|H|HHHBtell that a request.

And, he said, frankly--and Gen. Russo and I are both short
now, both of us are leaving within a few weeks. Jyaj|^
[that needs ■ come ov _h rough tht
That's What we told||||||||||||msend
put it on the piece of letterhead.

Q As a traditional request through thel

traditional reqxiest. And that's what Gen.

traditional request. A

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169

1 Russo advised me. I called^^^^^^^^Hand told him that.

2 He didn't have any problem with that. He said, fine. The

3 next question was, go get some.

4 Q He asked you if any were available?

5 A And we found out very quickly that there were only

6 two in the entire Army inventory stored at Letterkenny, the

7 property of the Iranian Government, kind of up on blocks in

8 cold storage so to speak for about seven or eight years.

9 Q These were the ones that were part of the assets?

10 A That were frozen at the time that Jimmy Carter

11 froze Iranian-owned assets in the United States.

12 Q And who told you that? Mr. Chapman?

13 A John Chapman did. And it wasn't very long after

14 that until he told me that it also took — he said, Chris, he

15 said, you can't just tell me you want these radars. He

16 said, there's a whole host of players involved. He said,

17 you're going to have to get Treasury, State, and the White

18 House.

19 He said he didn't know all the names but I

20 believe, John, that he gave me the name. It could have been
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Hin the

22 the Judge Advocate General. One of those two gentlemen

23 within a day or two had given me the names of the key

24 players, and I had all of them.

25 There were three different DoD offices, as well as

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1 the Treasury Department, the State Department, and the White

2 House.

3 Q Was the Defense Security Assistance Agency also

4 involved?

5 A Yes, it was; the Director was; but there were

6 other DoD offices, as well as that. I want to say that two

7 critical names ring a bell: Diane Blondell and Sally

8 Cummings, but I don't remember which place they were

9 anymore.

10 Q I believe Sally Cummings was at Treasury, and

11 Diana Blondell was at DSAA.

12 A Okay. There was another gal, though, that was a

13 main player in this. That was the gal with the State

14 Department. Anyway, I talked to the gal at the State

15 Department.

16 Q After you got these names either from Chapman or

17 from Bathan you began to make your calls?

18 A Yes. I called the gal at the State Department,

19 and I also talked to two of the different people in the DoD
2 0 agencies. I talked to somebody at the Defense Security

21 Assistance Agency, and there was another office, and 1 want

22 to say Office of Technology Transfer was the DoD level

23 office that I talked with the Lieutenant Colonel in.

24 He told me that he personally didn't have any

25 trouble at all, but that he needed to know where they were

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1 going. Again, the Office of Technology Transfer, he says

2 they sure aren't going to go back to Iran. That's what the

3 guy in the Office of Technology Transfer told me. He said,

4 we don't ever have any intention of giving these back. He

5 said, I don't have any problem releasing them, but we need

6 to run an interagency staff paper. The gal at the State

7 Department told me the same thing.

8 She also told me that day she was against

9 releasing them, she said, because they were in the middle of

10 negotiations with the Hague right then and there with Iran

11 on release of all these assets and reparations. So she

12 said, for the record I'm against it, she said, but I'm

13 willing, she said, if the White House is going to support

14 it, to be behind you.

15 And, she said, what we need to do is have all us

16 sit at a big table in one room — she says, we can do it over

17 here in my office — and she said she knew these other

18 players. All these names of these people were all connected

19 together. They all knew each other.

20 Q And this is Blondell you're talking about?

21 A Hell, the gal at the State Department. I think

22 that Diane was at the State Department, as I recall. She

23 may have been at one of these. But the gal who was at the

24 State Department, knew all the other players, was willing to

25 help me run an interagency staff action so I didn't have to

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1 run all over the City. That is, we would sit all the

2 players at one table and come up with a position paper where

3 everybody would chop on it and I could take it away with me.

4 To my consternation, about a day later Gen. Russo

5 called me up and said he had had a call f ron^^^^^^^^| to

6 complain about my doings. This was the first complaint I

7 had ever had from Gen. Russo in three years.

8 Q Now had you contacted ^^^^f^^^^H before you

9 started making these calls to tell them what you were going

10 to do?

11 A After I had found out that they were available, I

12 told^^^^^^Ha lot of work needed to be done to get them

13 released. He told me to go ahead with that. I hadn't given

14 him any details of it. He just said, well, go ahead and get

15 ready to do that.

16 Q As you understood it at the time, you were doing

17 what was necessary to execute--

18 A Absolutely. And at ^^^^^^|request .

19 Q So Gen. Russo called up to say thatj

20 complained?

A ^^^^^^^^^^^^^they were Iranian-owned. The

22 radars are Iranian owned. I told him that there were a lot

2 3 of people that needed to get involved to get them released.

24 He said, go ahead and get that done.

25 The next thing I knew ,^^^^^^^H had called Gen.

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1 Russo about my conduct and said the word had gotten back to

2 him to the Agency that I was muddling around in this

3 throughout the government, and to cease and desist

4 immediately, and who in the hell gave me authority to do

5 that?

6 So I was a little bit concerned, and I told Gen.

7 Russo was I was working ^^^^^^^^^| and I hadn't had any

8 complaints from him. He knew that they were Iranian owned.

9 So anyway, we ceased and desisted for just a very few days.

few days later, ^^^^^^^^^^^^^^^^^^^Hs ays,

11 on the radars. He said, we need to get them inspected to

12 see if they work.

13 You can imagine how I felt, but I said we'll go.

14 And John Chapman, in about two days, gave me an estimate of

15 the dollars it took to get them inspected. That was one of

16 the pieces of paper, John, that we did get from^^^^^^^H

17 ^^^^^^^^^^1 was funding to go and inspect and fix some

18 parts on the radar. There were some small parts that John

19 Chapman felt would have deteriorated in the eight years.

20 Q Let me back up a moment before we get to the

21 testing of the radars and so forth. Do you recall your

2 2 reaction when Chapman first told you that these radars, the

2 3 two that were frozen assets, belonged to Iran?

24 A Do I recall my reaction? I may have told you back

25 in April, and I'm not sure anymore, I certainly was

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surprised. If you want to lead the witness a little bit,
I'll help you lead me. I'd say that at that point there
were glimmerings of wondering.

I knew that we had a country that didn't want to
participate in the modernization program. We had a list
that we couldn't get to the customer on. I would have
started narrowing my choices at that point, if somebody had
asked me. To tell you the truth, the times were so busy I
didn't have much time to do much idle thinking and
speculation.

Q Well, after^^^^^fcalled Russo, and Gen. Russo

passed along his displeasure that you were checking around
town, you communicated that back toj

A Oh, he and I had a pretty frank one-on-one.

I told him what I thought about all
this. I said, fella, when you tell me you want something
and you want me to go after it, I said, somebody in these
places is a blabbermouth and, I said, I feel kind of at a
disadvantage.

I said, if you hadn't wanted me to go do it, I
said, you should have told me that when I told you that I
needed to get a lot of parties involved.

Q And was it at that point that he told you just to
kill it?

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1 A He told me to kill it, and don't talk to another

2 soul about it was the guidance at that time.

3 Q So at that point you assumed that the radar issue

4 was dead?

5 A I did.

6 Q Now a couple of days later, about four days later,

7 you say he called you back?

8 A He surfaces right back up again.

9 Q And then he wanted two post-Phase II radars, I

10 believe?

11 A That was the next project. This caused great

12 consternation and anger down at MICOM. I've got two

13 engineers now that have worked literally hundreds of hours

14 over a period of several months with me trying to do their

15 damnedest. They've really pulled out every stop doing an

16 outstanding job.

17 John Chapman says, Chris, what in the hell do you

18 want two post-Phase II configured radars for? He said,

19 surely they can't work with any of these systems you've got.

20 He said, are these going to the same country?

21 I called^^^^^^^^fto ask him that. He said, I'm
2 2 not going to address that. He said, treat this as a

23 separate request. Of course, on its face it looked like all

24 part of the same project. I'm going right to the same guys,

25 the same time frame, same office of DA. John was really

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1 mad. He went around and he found a couple of post-Phase II

2 configured radars. One of them, as I recall, was being

3 modernized for the Marine Corps, and we were going to give

4 them a brand-new one off the manufacturer's assembly line

5 and take the one that was being modernized.

6 That was one of the two. I think we had one in

7 stock.

8 Q When you asked ^^^^^^H whether these were for the

9 same customer--

10 A He just said, I'm not going to answer that. He

11 never said they weren't. He just said, I'm not going to

12 answer that. He never said they weren't; he just said, I'm

13 not going to answer that.

14 Q When he asked you about the two Post-Phase II

15 radars, did you communicate that to Gen. Russo?

16 A Yes. And Gen. Russo I think had the same concerns

17 I did. He said, it didn't make any sense. He said all

18 these so long had been 100 percent consistent; they didn't

19 want anything to do with Post-Phase II configured items, and

20 all of a sudden when we told them something Pre-Phase II

21 wasn't available.

22 And then we went a few more days after this

2 3 scenario, John, and we dropped that issue, and we went right

2 4 back to the Pre-Phase II configured radars.
25 Q On the testing issue?

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1 A Yes. We told them — one of the things I'm not sure

^^^^^^^^^^^^^^^H knew, since he's an engineer or a

3 HAWK person, is we told them there was no way to use any

4 part of that Pre-Phase or Post-Phase II system with the old

5 systems. I said, the electronics are completely useless if

6 you have the old system. I said, it's not usable. And I'm

7 not sure he understood that when he first came to us asking

8 for that as an alternative.

9 Q On the testing did you indicate that you would

10 need certification of funds in order to go forward?

11 A Yes, sir, I did.

12 Q And that was provided?

13 A And those were provided. And we did go forward

14 and test them, and they were found out to be usable with

15 only minor repairs required, less than a few thousand

16 dollars.

17 Q And the amount of money for the testing, I

18 believe, was $24,000?

19 A Yes, sir. I was going to say just under $25,000.

20 Q Now I believe you indicated when you were making

21 your calls around on the Pre-Phase II radars you talked to

22 someone in the DoD Technology Transfer Office?

23 A Yes. It's called the Office of Technology

24 Transfer, sir.

25 Q And he told you that it didn't matter what

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1 negotiations were going on in the Hague, we weren't going to

2 provide this to Iran. Did he say why?

3 A Well, okay. By the time I talked to that Colonel,

4 I knew that the State Department was against giving them up,

5 period. They didn't want them taken out of the inventory.

6 What the State Department gal told me was they were going to

7 pay Iran for those things. There wasn't any thoughts on her

8 part, either, to give up the radars to Iran. She didn't

9 want the negotiations, which she said had reached a very

10 delicate stage, to be disrupted.

11 The Colonel said, I don't really give a rat's ass

12 about the negotiations — I'm quoting him — he said, because

13 we're never going to give those back to Iran. He said, as

14 far as I'm concerned, if you give the money to the Treasury

15 Department — there was an office over there that was kind of

16 their representative to put money in for the reparations

17 account — he said, as long as that money is in there, before

18 those radars leave Letterkenny, he said, I don't have any

19 problem with that.

20 He also reiterated that the State Department and

21 other DoD offices, including DSAA, the Defense Security

22 Assistance Agency, needed to all be players. He said he

23 felt that Mr. Weinberger's representative also would want to

24 have a part in it, meaning somebody out of Mr. Weinberger's

25 own office.

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1 And he also, I think he also said the DUSD policy,

2 and this is Deputy Under Secretary of Defense policy.

3 Q When you were talking to the Colonel in the Office

4 of Technology Transfer, you told us in April he said we

5 weren't going to give them to Iran because they were our

6 enemy? Is that right?

7 A That, plus he said under the Arms Export Control

8 Act — once again, I was very familiar with this Act; the

9 Colonel was, too--under that Act, we weren't giving anything

10 to Iran. Now we're here prosecuting people right and left

11 in the Federal Courts for selling stuff to Iran. They were

12 considered an enemy, and that was considered high

13 technology, and that fell under the rules. The Colonel was

14 very clear on that. That was stuff we didn't give

15 nonfriendly countries.

16 Q Do you recall Diana Blondell at DSSA telling you

17 that if she was going to go forward in processing this

18 request, that you'd have to get a letter from President

19 Reagan?

20 A As a matter of fact, I think that is what Diana

21 told me. Different people that I had talked to around town

22 had different views. When I called^^^^^Hand told him I

23 would be happy to take care of that, I had no problem in

24 picking up the phone and calling the White House^^ I^ had

25 talked to other people over there in the past!

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1 ^^^^_,^

2 I said, I will be happy to go and deal with

3 the — because the Colonel knew who to call at the White

4 House. The guy up in the Office of Technology Transfer, I

5 was talking to all these people. Kind of it was a fluid

6 sit. You know, I was calling one person, calling another

7 one back.

8 And when Diane did tell me that and I surfaced it

9 ^^^^^^^^^H and just told him that I needed that, I said

10 can we get that, or do you want me to go for it and get it?

11 And that caused great consternation, too. He said, don't

12 talk to anybody at the White House. Because I told him that

13 I had somebody that would do it for us. And again, I

14 thought he was interested in speed and accomplishing the

15 mission. I'd heard the White House mentioned all along as

16 the main party behind supporting the mission. It didn't

17 seem to me, then, that they'd have any trouble supporting a

18 piece of paper to come over to DSSA.

19 But that was where he told me, don't do anything

20 else on that. He said, we will do all of the required

21 paperwork, all of the interagency stuff.

2 2 Q At the time, did you find that curious?

2 3 A Yes, I did. This was highly unusual. Never in

24 the past — I had worked on other complicated matters for the

2 5 Agency that did involve other government agencies, and I had

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never had any problem going forward with them. Even in
dealing with principals at other agencies — I would mention
the Department of Transportation, the FAA, and other — they
had never had any problem with me doing all the pieces to
get a job done. That's because I was always doing them for
Department of Army. J

That is when they flat asked me to back out.
Stop. Don't do any more. We will do all the required
coordination. When it's all f inished,^^^^^^^^Hwe will
come and tell you to go release the items.

Q Did Israel have any of our old radars on their
HAWKS?

A Sir, Israel was one of the FMS clients. I don't
know specifically what they had. I would not have
thought — I'm speculating; MICOM could give you a better
answer today — I would have thought, being one of the closer
allies, they would have been one of the first modernized and
wouldn't have had any old items left.

There were many countries that were fully
modernized by the time that John Chapman and I talked.

Q If they had any of the old radars, it would be
possible, I guess, for the Agency to request the two new
radars on the theory —

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1 A That would make sense.

2 Q — that they could provide them to say Israel, and

3 then Israel could sell the old ones to Iran?

4 A Yes, sir. That would make sense. But I did not

5 know any inklings of that at the time.

6 Q Do you have any knowledge of efforts in late 1985

7 to replenish Israeli stocks in either TOW missiles or HAWK

8 missiles, whole systems?

9 A Sir, I have done some work for Israel, but not on

10 those two systems myself. And again, if we did any other

11 work it was not done by our office after Jeff Stevens

12 retired.

13 Q Now I asked you from the outset about the issue of

14 low-balling on price, and you answered no. Is it safe to

15 say that the Agency on both the TOWs and the HAWKs wanted

16 the lowest price possible?

17 A Yes, sir. I am convinced of that.

18 Q And do you think that on both, or on just the

19 HAWKs, they had an absolute ceiling?

20 A Sir, 1 didn't get the impression on the TOWs that

21 there was an absolute ceiling, only because that I went back

22 to get additional money and we got it even though there was

23 a lot of whining and sniveling. On the HAWKs^

24 was adamant at the outset that we were going to have to live

25 within a fixed budgs

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1 Q And it is quite clear from your testimony, I

2 guess, that they wanted no substitutions with the TOW

3 missiles to upgrade them to the ITOW?

4 A That is true, sir. They didn't--well,|

5 ^^^^^^^^^^^^^^ said one thing that will impact here. He

6 said, we don't need anything more than that to meet the

7 threat that we have. That was the reason for not needing

8 anything bigger than that.

9 Q At any time in your activities with Snowball and

10 Crocus, did you have any dealings with the NSC?

11 A No, sir, I did not.

12 Q You do recall, however, ^^^^^^^^^^Hmentioned NSC

13 a couple of times?

14 A Yes, sir, I did.

15 Q Did anyone else mention the NSC with whom you were

16 dealing?

A ^^^^^^^^^^^^^^Hmay

18 Q Did Ms. Crawford or anyone in the General

19 Counsel's Office have any input on pricing decisions?

20 A Okay, anyone in the General Counsel's Office? Tom

21 Taylor had the only input, and that was to advise Gen. Rasso

22 that the Economy Act was the proper basis, as far as he was

23 concerned. And that was true based on historical work, as

24 WTll as the standard legal advice that had been provided to

25 us for a long time.

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The other fellow that had some input on the
tricing was|

He too had been involved in reviewing many, many
of the Agency's funding practices and had met extensively
with their Office of the General Counsel.

I believe^^^^^Hand 1 talked one or more times
on pricing issues on these two projects, but it was only
from the standpoint of was the Economy Act the propose
basis? I think I was concerned because of the size of the
project. These were multi-million dollar projects, not a
little project.

Q Let me ask you about the computer system used by
MICOM and Anniston Army Depot. First in a general way. Do
you have any knowledge about that system that they use?

A Sir, I have to tell you I know nothing about it at
all.

Q Do you know that they have the same computer
system, and that the MICOM system at Redstone feeds the one
at Anniston?

A Sir, I didn't know that.

Q Then you wouldn't know that they essentially
should have the same data in each?

A No, but it sounds logical.

Q Let me ask a specific question about readiness
impact and depletion on the HAWK repair parts. I really

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1 want you to help educate me here as to when — I have in mind

2 a particular snapshot as to the readiness data. We have

3 been told that at one point as the HAWK repair part issue

4 was being worked, the data showed that if we met the

5 requirement of 1034 line items in its entirety, that there

6 would be significant depletion with regard to 43 items; that

7 on 15 of the items there would be complete and total

8 depletion from the existing inventories; and on 11 of the

9 items it would be greater than 50 percent depletion —

10 A Those are my notes, sir, and that is true.

11 Q — and that on 20 of the items, it would not be 50

12 percent, but would still be called significant enough to be

13 classified as "significant depletion"?

14 A Yes, sir. Those are notes that I prepared for

15 Gen. Russo based on help from John Chapman at MICOM.

16 Q Okay. Do you recall when those figures were in

17 front of you, and when in the decision process these figures

18 existed?

19 A Well, they were in front of me before we put the

20 final package together.

21 Q If you can understand what I'm trying to ask, I

22 understand that readiness data is a rolling set of figures,
2 3 and that if you look at one set on one day, as items are

24 used, as items come out of the pipeline, as items are

25 relocated, the figures will change the next day, and even

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the next day, and so forth.

So let me ask it this way: At the point at which
the decision was made to actually go forward and meet the
requirement on HAWKs, what is your recollection as to
depletion of items from the data you have in front of you,
and that Gen. Russo had in front of him?

A Without looking at the paperwork that I prepared
in the matrix, which I kept all of that and I guess you have
seen all of it. Gen. Russo's main concern was, was this
going to have a major impact on U.S. Armed Forces?

As I recall, the answer back from John Chapman was
that it would have a minimal impact on U.S. Armed Forces
because, he said, the parts lost would mainly afl

that ^^^

^^ said we could have all
those parts back in inventory.

John Chapman was not greatly concerned about
giving up many of the items, he said, because as he finished
his modernization program, he said, we wouldn't be stocking
any more of many of those items. And, he said, some of them
if he could get the items modernized before the request came
in, he said, then it is a moot point.

Again, the whole idea of the modernization is to
eliminate that expensive duplication of inventories.

Q Was it his sense that there would have been some

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1 impact on readiness, though, with regard to our FMS

2 customers and availability?

3 A Yes, there was. John felt that there would be.

4 The final decision at the end that I participated in was

5 that we were going to support this mission.

6 Q And for the record, these FMS customers would be

7 our allies and people we had chosen to sell to.

8 A Sir, that is true.

9 Q Do you have any idea? Did you ever provide any

10 data as to which countries, and the extent of the impact?

11 A No, sir.

12 Q Would John Chapman have had that in front of him?

13 A He should have had it handy, but keep in mind,

14 John, on some of these items — let's say the 15 where we ran

15 them down — he might have only got one request in every year-

16 and-a-half. Some of the items were very low usage. Some of

17 them cost $100,000 apiece. It was one that would wear out

18 only through gross accident.

19 There was one he had that might not ever have been

20 requested in the next 12 months. So there was some, as you

21 said, on the picture window look, the readiness issue was

22 one of a lot of "ifs." If one broke somewhere in the world,
2 3 one customer may have. His average demand had shown on many

24 of those critical items that there was very low usage.

25 Some of the items, too, that we ran down to zero

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he was going to replete the inventory on in a very short
period of time. That is, he was going to replenish it. So
we worked a very tough set of decision processes. I think
the major concern was the impact on the Army, and that was
the driving factor in that there was determined to be no
real impact on the Army.

Q I understand that you did not go through thel
Ion Snowball or Crocus, so you did not dea]
At any point as you were working these requirements,
did anybody think to ask whether the Joint Chiefs knew
anything about this operation, or had approved it?

asked^^^^^^^^^^^^^^ Vou know, I guess the
first concern was that when I was dealing with the Defense
Logistics Agency — that's a DoD-level agency — I felt
uncomfortable about leavir

I was instructedb^^^^^^^^^^Babsolutely not to
deal with anybody in^^^^^^^^^^l And that was not even
available for negotiation. Just "don't do it, at all."

Q For the record, do you have any idea when the
Chairman of the Joint Chiefs became aware that we were
shipping these TOW missiles to Iran?

A No, sir, I don't. When I left in June, if you had
asked me at that time, I would have said that I'm not even
aware that he is aware of it. Again, the list in the

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189

1 Defense Department that I knew about was so small you could

2 have fit it on half a piece of paper in terms of everybody

3 that I knew that was involved.

4 Q For the record, when you left in June he didn't

5 know about it.

6 A Okay. That's what I would have told you if you'd

7 asked me, and I didn't think you did.

8 Q When these matters became public, who within DoD

9 did you talk to, or were you asked to brief, of whatever?

10 A The fellow that called me was the aide to Gen.

11 Kicklighter, and he called me at home.

12 Q And who is Gen. Kicklighter?

13 A He is currently Gen. Russo's successor. The's the

14 Assistant Deputy Chief of Staff for Logistics, and

15 designated as the new Director of the Army Staff.

16 Q And did you ever speak to Richard Armitage, the

17 Assistant Secretary of Defense?

18 A No, sir, I did not. I have never spoken to him in

19 my entire career.

20 Q I believe you told us in April that you were later

21 seen by agents of the FBI, and the investigators conducting

22 the Inspector General's investigation?

23 A That is true; yes, sir.

24 Q Did you testify before the Tower Commission Board?

25 A No, sir, I did not.

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1 Q And were you met with by the Tower Commission

2 staff?

3 A No, sir, I did not.

4 Q Have you thus far met with anyone from the

5 Independent Counsel's office?

6 A No, sir, I have not.

7 Q At any point as you have gone through the phase

8 after these matters became public, has anyone asked you in

9 any way to change or alter your testimony, or change or

10 destroy any records or notes?

11 A No, sir. I think it is very important to

12 reiterate what Gen. Russo and Gen. Kicklighter told me that

13 first day in late November when I arrived here. They said,

14 we want you to tell the story exactly like you remember it.

15 And, they said, do your very best to help all those

16 involved. Don't hold anything back.

17 That was the advice that Kicklighter and Russo

18 gave to me, and it has never changed. No Army person that I

19 have dealt with has asked me to alter anything.

20 MR. SAXON: I think those are all the questions

21 I'v« got.

22 Do you have anything further?

23 MR. KREUZER: No.

24 MR. SAXON: Let me say for the record to you,

25 Major, that we appreciate your being here. The record

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1 should show that Maj . Simpson is appearing voluntarily. We

2 have spent a great amount of time with him in the previous

3 interview, and a good bit of time today; and that you came

4 today on fairly short notice. So we want to thank you for

5 your cooperation with the Congressional investigations that

6 have resulted from all this.

7 We appreciate your candor and your forthrightness,

8 and we simply wish for the record that everyone we have

9 talked with had had the same spirit of cooperation with us
10' and, likewibfc , exhibited the same degree of professionalism

11 in working through these matters.

12 Thank you, very much.

13 THE WITNESS: John, I appreciate those comments.

14 THE REPORTER: Will he be signing his testimony?

15 [Discussion off the record.]

16 THE WITNESS: I don't need to sign it.

17 [Whereupon, at 1:45 p.m., the signature of the

18 witness having been waived, the witness being present and

19 consenting thereto, the deposition of Christopher Simpson

20 was concluded.]

21 * * *
22

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737

TRANSCRIPT
OF PROCEEDINGS

'united" STATES SENATE

SELECT COMMITTEE ON

SECRET MILITARY ASSISTANCE TO

IRAN And THE NICARAGUAN OPPOSITION

-iW4

/87

DEPOSITION OF MAJOR CHRISTOPHER SIMPSON

UNCLASSIRED

Washington, D. C.
Wednesday, September 9, 1987

PaitiaHy

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UHGkASSlEO

UNITED STATES SENATE

SELECT COMMITTEE ON

SECRET MILITARY ASSISTANCE TO

IRAN AND THE NICARAGUAN OPPOSITION

DEPOSITION OF MAJOR CHRISTOPHER SIMPSON

Washington, D. C.

Wednesday, September 9, 1987

Deposition of MAJOR CHRISTOPHER SIMPSON, called for

examination at the offices Senate Select Committee, Suite 901,

the Hart Senate Office Building, at 2:15 p.m. before DAVID L.

HOFFMAN, a Notary Public within and for the District of Columbia,

when were present on behalf of the respective parties:

ROBERT W. GENZMAN, ESQ.
Associate Minority Counsel
JOSEPH P. SABA, ESQ.
Associate Majority Counsel

United States House of

Representatives Select

Committee to Investigative

Covert Arms Transactions With Iran.

JOHN SAXON, ESQ.
Associate Counsel
United States Senate

Select Committee on Secret

Military Assistance to Iran

and the Nicaraguan Opposition.

ROBERT J. WINCHESTER, ESQ.
COL. JOHN K. WALLACE, III, ESQ.
Office of the Secretary
U.S. Army

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1 'I CONTENTS

2 I WITNESS EXAMINATION

Ma]or Christopher Simpson

by Mr. Saxon 3

70
74

3 ■)

I by Mr. Genzman
4 I by Mr. Saxon

J
6 ,' ' EXHIBITS

7
8
9
10
11
12
13
14
15
16
17
19
19
20
21
22

SIMPSON EXHIBITS IDENT'""-D

Exhibit 1

Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7

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23
43

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PROCEEDINGS
Whereupon,

CHRISTOPHER SIMPSON
was called as a witness and, having been first duly sworn,
was examined and testified as follows:
EXAMINATION
BY MR. SAXON:

0 Would you state your name for the record, please.

A My name is Christopher Simpson.

0 What IS your current position?

A My current position is the Finance and Accounting
Officer for the Fitzsimmons Army Medical Center in Denver,
Colorado.

0 You are, are you not, a United States Army major;
is that correct?

A Regular Army major; yes, sir.

Q Let me say for the record, Major Simpson, that we
spent a good bit of time with you before. We interviewed
you earlier this spring. You were deposed by the Joint
Staffs of the two Committees, so if I make reference to our
previous sessions or what you told us previously, that is
what I have reference to.

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1 'i This is really a continuation of the previous

2 deposition, so I am not going to go through the record m

3 terms of your background and all of the particulars, except

4 :j to say, for any subsequent readers of the record, tnat at

5 ; the time the Army, in mid-January 1986, received tne tasking

6 to supply TOW missiles to a customer whom we now Know to be

7 the CIA, destined ultimately for Iran, you were, I believe

8 i It is safe to say, the action officer to work that

9 requirement on behalf of the Deputy Chief of Staff for
iO Logistics with the Army; is that correct?

11 A That is correct, sir.

12 Q You likewise worked a similar follow-on

13 requirement for Hawk air parts up to a point at which you

14 left Washington and were transferred to Colorado; is that

15 correct?

16 A Almost correct. The project on the Hawks was

17 essentially finished when I left. There were only a few

18 straggling little items left, but 97 percent of the project

19 was completed.

20 I, Q I think It is safe to say that the record from
^1 your earlier deposition is pretty complete and detailed
22 about both the TOW and the Hawk requirements, tne TOW

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ow 1 I requirement, which you named Project Snowball, the Hawk

2 requirement, which became known as Project Crocus. So we

3 are not going to walk through the chronology with regard to

4 either of those two.

5 What I am going to do first is focus on some

6 questions pertaining to the TOWs, dealing with tne pricing

7 issue.

8 : As we know now, the price that was established by

9 the Army £or the basic TOW missile was $3469, which was

10 arrived at by looking in the Army Master Data File, AMDF,

11 and seeing a price for the basic TOW of S3169, and there

12 came a time when the Army learned it was going to be

13 necessary to outfit the basic TOWs with a safety

14 modification or missile ordnance inhibitor circuit or MOI,

15 which was estimated to cost !j300. So we added S3169 and

16 S30u and got ^3469.

17 Is that a correct recitation of how that figure

18 was arrived at?

19 A On the basic costs. Then we did add in ancillary

20 costs for shipping, handling and some modification of items.

21 0 That is what I refer to, the i)34by, as the price
^2 that was charged, and I leave otf, for our purposes, for

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1 , ease of discussion, the ancillary cost. There was also a

2 price, we now know, m the AMDF, for a basic TOW, with MOIC,

3 ^ and the Army Missile Command, MICOM, made the determination

4 after MOICS had begun to be installed, that a new missile

5 should go into the AMDF with a new national stock numoer and

6 a new price. T^at price was thought to be $8435 for

7 whatever reasons it was arrived at, and that was the figure

8 I that went m the AMDX.

9 ' So I will refer to the S8435 price as the one

10 that the AMDF said was to be charged for a basic TOVJ with

11 MOIC.

^'^ I run through this explanation, in light of the

13 fact that this is a follow-on deposition, in the interest of

14 speeding up, getting to the points we want to cover.

15 Let me ask you when you first learned that there

16 was an AMDX price of S8435 for a basic TOW with MOIC?

■l-^ A Well, I have to tell you that that was discussed

18 in detail in November with Colonel Lincoln at the DCSLOG's

19 office.

20 ■, Q In November of 1986, after these matters became

il public —

22 A November '86.

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bw 1 0 Is that the first time at which you learned tnere

2 was an AMDF price in that amount?

3 A Yes, sir; that is true.

4 Q From whom did you learn it, or how did you learn

5 that?

6 A I ac,tuaily learned it directly from Colonel

7 Lincoln. Colonel Lincoln had some extensive paperwork with

8 him up at the DCSLOG's office and was working out of my old

9 office, which is a very small place about as big as this
lu room and four people work in it. He and I spent about two

11 weeks together between about two days before Thanksgiving

12 and the 6th of December. And there was another colonel

13 working with us. He's gone now -- but Colonel Wallace, if

14 you could help me here. You were the fellow who worked

15 up -- he went out to take command' at the Sharp Army Depot.
it) he was assigned to the Log Accounts Office for a while.

17 MR. SAXON: Let's go off the record.

18 (Discussion of the record.)

IS THE WITNESS: Colonel Chesnoe was the guy

20 responsible for gathering all the details, and of course,

21 Colonel Lincoln was on the phone about every 20 minutes

22 getting more details to give to Colonel Chesnoe. There were

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ow la lot of discussions between Colonel Lincoln and I at tine

2 time.

3 BY MR. SAXON:

4 0 That's when you first became aware of that

5 figure.

6 Did Colonel Lincoln indicate to you when he first

7 became aware of tnat figure?

8 ' A No, sir, not really. I may have heard, at the

9 time, in November, but I can't remember it now.

10 0 VJhat instructions do you recall naving given

11 anyone at MICOM with regard to price at the time wnen the

12 requirement first came down and the pricing determinations

13 were being made?

14 A Well, the first time that we discussed price,

15 Colonel Lincoln and I, was the first Saturday of the

16 project, the 18th of January. We discussed price because we

17 were comparing notes to make sure that what I was asking

18 for, that he understood that he was going to look for, what

19 I wanted. So of course, I gave him the stock number and a

20 '' price. He looked it up, and he and I both confirmed that

21 afternoon, that first day of the project that what I was

22 asked tor was prices, his records and my records looKed

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1 exactly the same, which would have been correct, since we

2 were using the same catalog data to look at.

3 Q I understand your answer, although it responded

4 to a more general question than the precise one I asked.

5 Let me ask it this way. Was there a point at

6 which you dictated, not personally, but on behalf of the

7 Department of Army Logistics Office, to anyone at MICCM,

8 ! that this is the price we're using. This is the price we've

9 agreed upon. This is the price you'll plug into your

10 documents, your computations, your records, et cetera?

11 A Generically speaking, I did do that sometime,

12 weeks in the project, when we had already gone througn the

13 addition of the MOIC and arguments over replacement costs

14 for other models of items and arguments over their use of

15 the Army pricing regulation.

16 VJhen we got to the point where I told Colonel

17 Lincoln, if there were to be any more changes in the trutn,

18 that his chain of command would have to surface at my

19 leadership. I was getting out of the changing of the price
^0 I business with him.

21 Q Let me ask the question again.

^2 Did there come a point when you gave any

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1 I instructions to anyone that said, this is the price that we

2 ; will use?

3 A I never demanded that Colonel Lincoln charge a

4 particular price, only that if we were going to change the

5 price again, my boss was going to have to get involved.

6 Q So t^e understanding from your standpoint is that

7 once you and Lincoln discussed price and both of you saw in

8 j your AMbF that 3169 was right, and you later both added 300

9 and got 346^, that was the price from that point on?

iO A Except for the items that we modified, which, as

11 I understand it, was never shipped during my tenure there. •

12 That was another change to the price that added more costs,

13 but the base price we started with was 3169. It never

14 really changed in the course of the project. And as I said,

15 from the very first day, that was the price we had agreed

16 on.

17 Q All right.

18 Were you ever — did you ever give anyone any

19 instructions with regard to what price, if any, should

20 appear in any transfer documents that went with the

21 missiles?

22 A Let me think back to all that long time age. I'd

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1 ; have to tell you for the record, John, that I never gave —

2 I understand Chris Leachman prepared the documents. I never

3 gave him any specific instructions, but had I seen a price

4 when I got down to MICOM on that evening of the first

5 shipment of anything, other than 3469, I would have

6 vigorously opposed signing the document, because I was

7 looking for a record of accountability, just as I had on

8 I many previous transactions. I was completely concerned

9 about my liability to MICOM, so I wouldn't have accepted any
iO other figure than what we agreed upon, but I never told him

11 that that's the figure you will put in.

12 Q Would you have had the same reluctance to sign a

13 document, if you had seen it and it bore no price?

14 A Well, that's an issue, because, as I recall, wnen

15 I got down to MICOM, if there's a shipping document that I
lb actually signed the morning after the delivery took place at

17 about 7:00 a.m., and i looked at it first at about 2:00 a..-n.

18 in the morning, we had finished the shipment and gone back

19 to Chris Leachman's office, besides the fact, I believe,

20 that nere was no price entered at the time. That's the best

21 recollection, nearly a year and a half later. I just can't

22 tell you, John, what I said at 2:00 o'clock in the morning.

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Dw i except that there were enough details not filled in on that

2 document, that he agreed that we would both come back at

3 7:00 a.m. and finish completing it, that he would have it

4 all typed up and would be ready for me, if I got in the

5 office after 7:00 in the morning. When I came in at 7:00,

6 it was ail finished. I looked it over and will have to

7 confess that the thing I was really looking for was the

8 1 number of widgets, that is, the number of TOW missiles in

9 the price:

10 I was not too concerned about fund codes or

il signal codes or other technical data that would have been on

12 there.

13 Q I'm a big confused as to what you're telling as,

14 because you say that you would have felt an obligation not

15 to sign a document?

16 A I would not have signed it.

17 Q If there had been the incorrect price, meanir.g a

18 higher price of Stt435, but for some reason, you wouldn't

19 have felt the same as if there was no price whatsoever?

20 , A I wouldn't have signed it with no pricing either.

21 I wouldn't nave accepted a document, keeping in mind that

^2 copies were going to stay at MICOM that would have not nad a

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bw 1 price tilled in. I would not have accepted it. The only

2 way I would have walked away with that transaction
!

3 completed, is if the price had said 3469.

4 0 Did you ever tell Chris Leachman tnat the price

5 block on the transfer document, the DD1348 standard transfer

6 document, was tp be left blank?

7 A No, sir, I did not.

8 I Q Did you ever tell them that there was to be no

9 reference 'to price whatsoever on the 1348?

10 A No, sir, I did not.

11 0 The same two questions with regards to George

12 l^'illiams.

13 Did you ever have any discussion with Williams

14 tnat the price block should be left blank or that there

15 should be no reference to price?

16 A No, on both counts.

17 0 Same question as to Mr. Collier.

18 Did you ever have any dealings with him?

19 A I don't even know who Mr. Collier is. Never
^0 I heard the name before.

21 Q The same question with regard to Colonel Lincoln.

^2 Did you ever make any statement to him aoout tr.e

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1 price block on the 1348, that it should be left blank, tnac

2 there should be no reference to price?

3 A No, sir. And I tnink it's important to add for

4 the record that well before the first shipment actually too.^

5 place. Colonel Lincoln established the division that would

6 handle all the ^transfer paperwork for him on that matter.

7 So on the morning that I actually left after the

8 I first shipment. Colonel Lincoln was not even in the area.

9 He had had to go on a trip and was out of the net the

10 morning that Chris Leachman and I actually completed the

il paperwork.

12 Q I'd like to walk you through some documents at

13 this point. The first document, which is really three

14 separate iterations -- I am going to give you a chance to

15 look at this. I

16 MR. SAXON: I ask that that be marked as

17 Deposition Exhibit 1.

13 (Deposition Exhibit 1

19 identified.)

20 [ MR. SAXON: This is the Material Release Order,
i

21 MRO, that was prepared at Redstone Arsenal for each of the

22 tnree shipments. The first one is for the first shipment of

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bw 1 100 TOWs. The second is for 508 TOWs. The third one is for

2 500 TOWs.

3 If you look at the quantity blank, you'll see the

4 number on the first one of 1000, and so forth, as I just

5 represented it.

6 If ypu look at the unit price blank, you will see

7 that for the first shipment, it's $8435. The same price for

8 \ the second shipment, and the third shipment, which was the I
'i TOVv downgrade, was $8164.

iu I would assume that you did not see this documenc

11 at the time.

12 A I have never seen these documents before today,

13 John.

14 0 So your answer, I guess, would be that you never

15 knew that the people who prepared the first piece of paper,

16 in order to task this requirement further from Redstone to

17 Anniston Army Depot put in the 8435 price?

18 A No, sir. I would not have known anything that

19 would have been put in this document.

20 !; MR. SAXON: Let me go then to the second exhibit

21 and ask that that be marked.
22

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bw 1 I ^0m-m-^^- (Deposition Exhibit 2

2 identif ied. )

3 BVr MR. SAXON:

4 0 This is something called an Ammunition Planning
b Work Sheet.

6 To s^ve us all time, I will direct your attention

7 to the block that says "Quantity." This is 1000. In the

8 I total price, if you do the quick division and drop the

9 zeros, you' will see that the price was 58435 per TOW.

10 This document. Exhibit 2, Ammunition Planning

11 Work Sheet, was prepared at Anniston Army Depot. So tne way

12 the prices went, MICOM, it was telephoned down to Anniston

13 Army Depot. A hard copy then followed. They prepared the

14 Ammunition Planning Work Sheet.

15 Let me ask for the record if you have ever seen

16 tnis before today?

17 A John, I have not.

18 Q • Then I take it that you would not know that at

19 Anniston Army Depot, when they started working the

20 requirement that they used the price of S3435?

21 ; A No, sir, I did not know that. I might want to

22 add, to help you for the record in these proceedings, that

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1 I when I went down to MICOM for the two shipments, I was

2 ,j involved in, I saw no documents other than shipping

3 i documents that I took away with me, which is in the records,

4 and copies of the safety inspections that an on-site safety

5 , inspector actually performed of the trucks. In other words,

6 all the documents I actually saw, I kept, and were m my

7 files when this matter all came to public attention.

8 i 0 Let's go to the transfer documents themselves,

9 and I'll ask that you take a look at this.

10 MR. SAXON: And that that be marked as Exhibit J

11 (Deposition Exhibit 3

12 identif ied . )

13 BY MR. SAXON:

14 0 This is the first iteration of the transfer

15 document. This was for the first shipment.

lb If you look in the quantity block, you see 1000

17 missiles. This was prepared at Anniston Army depot for

18 transfer, as you can see, to MICOM. The unit price block

19 bears the price of S8435. You indicated you did not see any

20 documents.

21 A I never saw this particular document.

^2 Q Other than the transfer document that came wita

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.bw 1 the missiles?

2 A Right. This is not the one that I saw. The one

3 that I saw, and I made sure that it had my signature on ail

4 copies, and I kept ail of the copies but one. I think that

5 IS important. Colonel Lincoln and I had established that as

6 part of the plan of operation at the very beginning. Ue

7 would only keep one single copy of the original copy, and

8 I all the other copies I kept. So the only copy that he would

9 have had down there that I saw had my name on it, was the
lU signature.

11 Q For the record then, you would not have know that

12 when Array personnel at Anniston Army Depot prepared tneir

13 version of the DD1348, they put in the 58435 price?

14 A No, sir.

15 MR. SAXON: We go to the next exhibit, which I

16 ask be marked as Exhibit 4.

17 (Deposition Exhibit 4

18 Identified.)

19 BX MR. SAXON:

II
^0 ■, 0 I'll give you a chance to look at that.

21 This was the DD1348 that was actually signed by

^l Chris Leachman. In the photocopying, it cuts off the top.

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1 but I will represent and cannot show you, that if we saw

2 another fraction of the page, that the price bioc)^ tnere

I
I

3 does not bear the price of S8435, but is, in fact, blani^.

4 Let me ask you for the record, if you recall ever

5 having seen this document?

6 A I've, never seen it, and it was never discussed

7 with me.

8 i 0 Is it that in some manner, as the missiles were

9 physically transferred by baggage truck from Anniston to

10 Redstone, the pricing document either gets changed or a new

11 one gets created with, I think, no price, and it would ze a

12 fair inference?

13 A John, could you back up and say tnat sentence

14 over.

15 Q Sure. What the document seems to suggest is,

16 tnat in some way, as they physically go from Anniston, with

17 the transfer documents that bears the price of S3435, when

18 ' they arrive at Redstone and the transfer documents which go

19 with them, are either created or changed, the price ceases

20 l' to appear on the price block?

21 A John, I can't comment on what Chris Leachman did,

22 but I think it is important to establish wnere I first iaia

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bw 1 eyes on the missiies, and that is, they were out in secure

2 i holding area, which has a federal policeman guarding it, and

3 they were stacked up in crates under armed guard. The armed

4 guards belonging to Anniston. This is out in literally a

5 field environment.

6 0 I unjlerstand your testimony. There are things

7 that took place before you got on the scene or that you had

8 I no knowledge of, and we appreciate that. I am simply

9 showing yofu what the document trail itself shows, up to tne

10 point at which you come on the scene.

11 MR. SAXON: So I go to the next document, wnich -1

12 would ask be marked as Exhibit 5.

13 (Deposition Exhibit 5

14 identified.)

15 BX MR. SAXON:

16 0 This is the DD1348 for the first shipment whicn

17 you signed. I would ask you for the record, if that is your
lo signature.

19 A That sure looks like it.

20 ' Q You'll notice. This is an enlarged version, but

21 : on this form, the unit price block, likewise, is blank.
z2 Now you testified a little earlier tnis

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1 arternoon, that your recollection was that when you saw tne

^. transfer document that, in fact, was blank.

3 A That's true. We recovered the copy that was in

4 Colonel Emheiser's office. That should show the correct

5 amount. I wish I could see that document today.

6 Q The (iocument we just looked at. Exhibit 5, and

7 the document we looked at. Exhibit 4 — help me, if you can,

8 ^i understand what physically took place here. We have

9 Leachman, 'apparently, signing for the missiles. VJe have nis

10 signature on Document 4, Exhibit 4,

11 When we get to Exhibit 5, and you were asked co

12 sign for them, Leachman's signature is not there.

13 Does that mean that you signed a new and

14 different form, that a totally new one was prepared?

15 A That is true. When I got there on the evening of

16 the 13th of February, there was no document prepared for me

17 to sign, and I do recall, and of course, Leachman should

13 recall this, he asked me how I wanted to show this 1348, for

19 example, the destinations, and the chargeable office, and

2U who was to be the consignee.

21 All those were by prior arrangement. I was the

22 consignor, even though the shipment was going out of

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1 Redstone Arsenal, and it was to go to a place that would be

2 difficult to track, and there were reasons which we

3 discussed in previous testimony, why they were listed as

4 going to Oakland, but this was not prepared when I got there

5 late in the afternoon of the i3th of February. It was done

6 sometime before^ 7:00 o'clock the next morning.

7 0 And if I understand what I think the documents

8 I reflect in your testimony, in the normal course of business,

9 you will not have endorsed or signed the sauue 1348 that

10 Leachman did, but that simply reflected that they had taken

11 possession on behalf of MICOM from Anniston Army Depot?

12 A That's true.

13 Q Then a new document would be created for your

14 signature showing the transfer to you and that you had

15 received them on behalf of the Department of Army Logistics?

16 A That 13 correct, John. This is normal business,

17 where they actually slip into the material and sign a

18 document from the last consignor to the point of receipt.

19 0 When you signed the 1348, which is Exhibit 5, do

20 you recall any discussion at all between you and Leachman

21 about the fact that the price block was blank?

22 A Well, John, as I recognize as I discussed earlier

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bv* I ' today, that block was blank when I first saw it.

2 ' Q The question was, do you recall any question

3 about the fact that it was blank?

4 A John, at this late date, I would have to

5 speculate on what we might have discussed about that. I

6 just can't remejnber. I know I paid attention to that.

7 That's about all I can remember on that subject.

8 I Q Do you recall noticing the fact that it was

9 blank?

10 A Yes, I remember that.

11 0 But your testimony today is that you simply don't

12 recall whether you and Leachman ever discussed the fact tnat

13 It was blank?

14 A I'd have to guess, and I don't want to do that.

15 0 Let me ask you then to go to the next exhibit.

16 MR. SAXON: I am going to ask that be marked as

17 Exhibit 6.

18 (Deposition Exhibit 6

19 identified . )

20 BY MR. SAXON:

21 0 This is the transfer document, showing transfer

22 from you on behalf of the Army to an individual who received

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bw 1 them on behalf of the CIA, whose name has been blanked out

2 in the declassified version of this document.

3 Vou would know who that individual was, and in

4 fact, when you first talked to us, you gave us his name.

5 For reasons of trying to keep this at the lowest

6 classification J.evel, it's not necessary to indicate who

7 that is.

8 Let me simply ask if this appears to be the

9 document that you recall having signed showing receipt and
10 if, in fact, that's your signature, and if it was used to
il convey them to the CIA?

12 A Yes, it does.

13 John, I think there's something important here.

14 That's why I was a little bit hesitant just a few minutes

15 ago.

16 I didn't remember signing a document that looked

17 like this, with all these details left blank, and the very

18 important data of the number of details that are missing. I

19 guess that is because they were all cut off up at the top .

20 i! This is the document that I actually signed.

21 What you have here, this particular exhibit, with the top

22 cut off of It, and if you line them up, that is precisely.

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1
bw 1 and I have a very unusual signature, if you line them up,

2 you will see that your Exhibit 5 and your Exhibit 5 are

3 precisely that same signature on that one document.

4 I think if you do that, you will see that they

5 line up.

6 0 All fight. Then tell us, if you would, who put

7 the additional information in Exhibit 5 before the time when

8 It was signed by the representative of the CIA.

9 ' Did you personally --

10 A No, I typed nothing on this document. I

11 obviously did not have an access to a typewriter down tr.ere.

12 This is the document that I actually saw out at 7:00 o'cioci^

13 in the morning, the one with all of the data typed in it.

14 That IS correct, sir.

15 That IS your exhibit.
16

17
18
19
20
21
22

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pv 1 : Q I can assure you we did not put that material la

2 there.

3 A No. This is the one I remember, because the one

4 I remember had the price on it is my memory of this

5 particular document. And if we could see the rest of it —

6 part of this dopument is cut off up at the top, which I

7 think is an important omission.

8 i But this is a part and a piece of the same

9 document right here.

10 Q I am even more confused now because you seem to

11 be saying the document you signed had the price on it.

12 A That is what I said to you earlier today.

13 Q No. You told us on two occasions that the

14 document you signed at MICOM had no price, and you

15 distinctly said it was blank.

16 A If you get the reporter to go back, I tnink you

17 will recall that what I said was that I would not nave
13 signed the document if -it nad no price in it.

i9 Q No. You told us you would not have had the

20 higher price, and I specifically asked you a second time if,

21 in fact, you would have signed a document that had no price,

22 A No. I think we need to go back and review cne

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pv 1 record because that is not what we said.

2 0 All right. Well, let me ask you now whether tne

3 document you signed at MICOM when you took receipt of the

4 missiles had a price or whether the price block on the DD-

5 : 1348 was blank?

5 A No, gir, it had a price on it as well as this

7 other specific data that is listed here.

8 I 0 So you are suggesting that on Exhibit 5, that at

9 the time you signed that, it had a price and in the form

10 that It's in now, that it would have been altered and the

11 price removed?

12 A I think there is an even more simple explanation

13 than that. I think that Exhibit 5 is only the lower naif of

14 the same document.

15 0 If you look at the exhibits, you can see that tne

16 entire price block on Exhibit 5 — and I do apologize tor

17 the fact that the very top is cut off — but every bit of

18 the price block on Exnibit 5 is copied and it is completely

19 blank.

20 A Maybe I don't have the same copy you do, then,

21 because these blocks aren't even printed here if you look up

22 here at these blocks.

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pv 1 ' 0 This is the price block.

2 A But you notice that the price block is also

3 blank, on Exhibit 6. The price is actually typed in above.

4 That IS a different block in the supply business. The

5 dollars and cents, if you look very carefully, John, this is

6 just supply terminology. The price seen in Exhibit 6 is m

7 the right place, and Exhibit 5 is missing data blocks.

8 ■] 0 I will see if we can find the copy from which

9 that was made.

lu A Exhibit b, for the record, is what I clearly

11 remember signing, and what I remember signing is, as I

12 discussed with you earlier, although I don't remember the
"13 very same details, I remember clearly that we did discuss

14 the price block. And as I said earlier in today's

15 testimony, I would not have signed a document with no price

16 on it, especially because there had been so much discussion

17 of price up to this time.

18 MR. GENZMAN: May I follow up with a question?

19 Did you say earlier, sir, that these two documents are t.he

20 ,1 same. Exhibits 5 and 6?

21 THE WITNESS: Although I am not a handwriting

22 expert, I recognize my own signature. I think if you line

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,pv 1 these up and get the biocl<s ail tied together, m spite of

2 the slight deviation you get trom copying machines, if you

3 look at the way -- if you look at the way my signature on

4 the end of the "s" flows over the words that says "Received

5 document," I think you will see that they are precisely tr.e

6 same document. ,

7 BY MR. SAXON:

8 J 0 I think if you look at Exhibit 5 down in the very

9 bottom, at the lower right-hand corner, you will see the

10 number 1 and the number 2, and it would suggest to me that

11 this was copy 1, which was used for one part of the

12 transfer, and that copy 2 then had additional information

13 put on it.

14 A But I am concerned. I did not sign two documents

15 down there that day, John. I only signed one document on

16 the 13th of February.

17 MR. GENZMAN: If I could follow up, do you know

18 what the 1 and the 2 signify? Are those back to back?

19 THE WITNESS: Those are different copies. This

20 • document typically comes in six copies, as I recall.

21 MR. GENZMAN: Are they back to back so that it is
i.2 a multiform?

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pv i THE WITNESS: That is correct. They are bacK to

2 back.

3 MR. GENZMAN: With 1 at the top and 2 and 3

4 behind?

5 THE WITNESS: To tell you the truth, it's been a

6 while since I ' vp been out in the field. I think that number

7 1 is at the top/ but I am not positive. I do know that I

8 I only signed one document.

9 ' BY MR. SAXON:

10 Q At MICOM at 7:00 in the morning?

11 A At 7:00 in the morning on the 14th.

12 0 Let me ask first if you know whether the DU forn

13 1348 is a manifold document with various copies for various

14 copies for different endorsements?

15 A I do know that it is a manifold document and

16 there are various copies for different endorsements.

17 0 Second, where did the document which is Exhibit

18 6, which was signed by a representative of the CIA, where

19 was that signed? Physically, where was that signed?

20 / A That was signed in Colonel Lincoln's office on

21 the morning of the 14th of February. And as I recall, the

22 gentleman that is listed there watched me sign the document

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.pv 1 that Chris Leachman handed me.

2 Chris Leachman thought that gentleman to be from

3 the State Department and was there to observe all of the

4 proceedings, so his presence there when we signed this

5 document did not alarm him. That gentleman could confirm

6 that I only signed one document from Mr. Leachman for that

7 day .

8 I Q Do you have any idea, if you signed one document

9 -- forget about the price block for a moment, since we are

10 limited by the fact that Exhibit 5 is cut off at the top,

11 and clearly Exhibit 6 has more data in it -- do you know in

12 what way that additional data was put on there?

13 A Well, the data that I recognize was added on

14 later. Some of these things are out of my office. They are

15 classified by stamp.

16 The special-handling stamp and the two secret

17 stamps are all items that we added on at our office at the

18 Pentagon, not put on by MICOM. The technical details frsm

19 block 1, it's dated. It's supposed to be keypunched into

20 the supply system for billing purposes.

21 The numbers JXT are actually supposed to tell the

22 Depo Systems Command where to send the depo interfund bill.

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That IS the normal supply business. That data is actually
essential in a shipping document m the government.

Other than the gentleman's signature where it's
blacked out with my name for Major Simpson, the special-
handling stamps and the secret stamps, everything else tnat
IS on this was ft MICOM.

Again, I would mention, sir, that my story can be
corroborated that at no timg during this transfer business
from 7:00 'until 8:00 that morning was I alone. In fact,
that gentleman who was with me who observed the proceedings
and I left together, left the building and drove away
together. We drove away in separate cars, but we went down
to the parking lot together. I think that is important. In
otner words, I was not by myself during these proceedings.

MR. SAXON: I would like to go back, if we can,
in the record and have you read back the earlier question
about whether there was a price on the document that Major
Simpson signed when he first arrived at MICOM.

(The record was read as requested.)

BY MR. SAXON:
0 Let me ask you, to the best of your recollection,
when you first saw tne DD-i348 and you were at Redstone

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1 Arsenal for the first shipment, do you recall if the price

2 block had anything in it?
i

3 A John, as I best remember, it was blank at 2:00 in

4 the morning. That was tne first time I had actually seen

5 it. That as well as other data was missing, and we agreed

6 to delay the signing of it until the document was completed.

7 ; 0 So at the point at which the price block was

8 i| blank, you did not sign the form?

9 A ' That is correct.

10 0 When you left, got a few hours' sleep, came back

11 later in the morning but still early in the morning, at that

12 point there was additional data typed into the 1348, and you

13 signed it?

14 A Yes, sir, that is correct.

15 0 And your best recollection is that when you

16 signed the 1348, there was a price in the price block?

17 A Yes, sir, there was. I think it is important

18 that when I left MICOM that morning of the 14th of February

19 19b6 there was only one single copy of that shipping

20 ;; document left at MICOM, and that was by my prior agreement

21 , with Colonel Lincoln on minimizing the paperwork involved.

22 Q What do you recall telling then Major General

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pv 1 Russo about the question of price as regards whether 53469

2 was the correct price? Were you the person who told him

3 that that was the price that was agreed upon?

4 A Yes, sir. General Russo, though, was privy to

5 all the changes in the two from MICOM as well as ail tne

6 add-on costs that surfaced, and as you and I discussed some

7 months ago in testimony, his frustration with this

8 - constantly changing procedure led to a message that I

9 drafted over his office symbol, which he was the releaser

10 on.

11 It said that we understand that the costs

12 incurred to date come to some figure which we are providing

13 you and no additional costs will be incurred without a prior

14 confirmation or approval by this headquarters.

15 That is essentially the message, and I tnink you

16 have seen that message before.

17 0 To your knowledge, did General Russo ever have
13 knowledge that a case could be made that $8435 -was the

19 correct price for the basic TOW?

^0 A Sir, General Russo and I never discussed a price
like that. The only time that I know that someone otner

22 than me ever discussed price with him was that when General

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pv 1 Burbules called him.

2 Q So your answer would be, no, to your knowledge,

3 he did not know that there could be another price of S8435?

4 A Yes, sir, that is my answer, that he could not

5 know that there could have been that price.

6 Q And you are the person who provided that price to

7 the CIA of $3469?

8 I A Originally, sir, we started out with $3169.

9 Later on v^e came up with a price of $3469; and even later

10 on, other changes for later iterations.

11 Q So I take that to be yes?

12 A Yes, sir, that is correct. I was the guy that

13 provided the price to them.

14 0 Did your counterpart at the CIA ever tell you

15 that they had a planning figure of $6000 that they were

16 using?

17 A No, sir, I don't recollect that they ever

18 discussed a figure like that.

19 i Q Did your counterpart at the CIA ever tell you

20 that they were going to be receiving $10,000 per missile?

21 A No, sir, he did not. The only thing that might

22 be of nelp to the committee here is that I sensed, wnen I

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. pv 1 first provided that price to them, that that wasn't the

2 price they were expecting, because the order came bacK and

3 changed very promptly.

4 We had started out with a requirement for about

5 4000 missiles. Within a very short period of time — I am

6 talking about just a day or two -- the order had risen from

7 a figure of about 4000 to 4508, a very precise figure. And

8 even at one time it waddled between 4505 and 4502, but it

9 was an odd figure, slightly 4500. And by the end of the

10 first week it had settled down and boiled down to 4508.

11 But I just sensed that they were quick to come

12 back with the change, and that was unusual in my dealings

13 with the agency. Normally, when we went back and dictated a

14 price for a project, they would either come up with more

15 money or if the price was too high for them, they would come

16 back and reduce sometimes the amount of support. But never

17 had I nad occasion that when they got a price they came and

18 promptly increased the order.

19 So that was the only unusual thing about that

20 mechanism. But they never actually discussed what price

21 they were expecting.

22 Q Did Colonel Lincoln ever indicate to you after

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.pv 1 $3469 was agreed upon and you had made it clear that there

2 i shouldn't be any further changes, did he ever indicate to

3 you that he had learned that perhaps there would be a higher

4 price that they should charge, although he understood they

5 couldn't get it?

6 A Sir,, Colonel Lincoln and I had had some

7 discussions on higher prices, but they related to different

8 { model numbers.

9 Q So that really related to replacement costs?

10 A Replacement costs. We did also have discussion

11 which he and I in November disagreed with precisely the

12 details as we were recalling what we had said and had not

13 put on paper months earlier.

14 But in November of '86, when we were going back

15 over the details, it seems to me that I recall that we

16 discussed something about the fact that he had surfaced the

17 issue, and the rocket motors were changed on the later

18 adaption that I understand was not shipped during my tenure

19 and may not have been shipped at all. But the rocket motors

20 ; came out of later production run.

21 I There was some discussion. As I recall, he

22 . wanted to raise prices for that later rocket motor; in other

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1 • words, a Later-model rocket motor that might have had a

2 higher production cost.

3 Q To your knowledge, was your discussion between

4 General Burbules and General Russo confined to replacement

5 costs?

6 A Sir, as I can best recollect, I can only tell you

7 ' that General Russo called me up to his office and told me

8 said, "Burbules has called me about price," and he said

9 basically,. "I told him we can't screw around and ruin this

10 mission -over bureaucratic maneuvering." He discussed with

11 me the fact that he didn't see -- and he told Burbules how

12 he could take up an old, beat-up missile near the end of its

13 useful life that cost us S3169 to buy, add a S300 MOIC, and

14 come up with any other price.

15 That was all part of that generic discussion. I

16 think they talked for some time. But I was getting kind of

17 an executive summary of it. That's about all the details we
13 discussed from the conversation with him.

19 ;; 0 At any point in that discussion did General Russo

20 j| tell you what price Burbules was claiming MICOM should be

21 I paid?

22 ■ A No, sir.

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-•vpv 1 i Q Were you briefed after General Russo talked to

2 ' then Major General Colin Powell about the replacement cost

3 i issue? I believe you told us before that he came back from

4 the meeting in Powell's office and had asked you to stay and

5 ' then briefed you.

6 ! A Yes, sir. And I believe those things run

7 together, sir, all this long time later. I met with General

8 Russo almost daily on this project, and I do know that twice

9 a day he went to see Major General Powell. Twice he had

10 come back to see Major General Powell. He briefed me after

11 he would come back on what was said.

12 Q Do you recall at what point General Russo !-.ad

13 talked with General Powell about replacement costs?

14 A No, sir. The conversations we had had with

15 respect to his discussions with General Powell, as far as I

16 can tell, focused on whether economy was a proper basis for

17 transfer. We never discussed details about the prices.

13 That is. General Russo never told me that General Powell and

19 he had ever discussed any details about prices.

20 ij 0 So would your testimony be that you don't think
jl

21 j they did discuss replacement costs or price or that if they

22 i did, you weren't made aware of it?

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A The latter, sir. In other words, if they did
discuss it, I wasn't made aware of it.

0 If someone testified that you told them there was
to be no reference to price on the DD-1343, would you take
issue with that?

A To the point that I would offer to take a lie-
detector test.

Q So your testimony is you never T.ade any stateTient

to that effect?

A . No, sir.

Q For the record, did you ever receive what you
would perceive as pressure in order to do anything that you
would call improper with regard to price, particularly to
come up with a low price for these TOWs?
A No, sir. Never.

MR. SAXON: At this point I am prepared to ask a
few questions about HAWK repair parts. Joe or Bob, do you
have anything more on the TOWs?
MR. SABA: No.
MR. SAXON: On pricing?
MR. SABA: No.
MR. SAXON: I am going to leave that subject.

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MR. GENZMAM: Fine.

2 1 BY MR. SAXON:

3 i Q Before I go to Hawk repair parts and before I

4 1 forget, let me ask a question one of my colleagues is

5 .i interested in from a different area of the investigation.

6 i Do you know anything about Phoenix missiles?

7 i A Nothing, sir. Nothing at all.

8 MR. SAXON: That takes care of his questions.

9 ' BY MR. SAXON:

10 0 . What I want to focus on with regard to the Hawk

11 ground equipment repair parts is the ground readiness issue

12 and any discussions you were a party to with anyone either

13 at MICOM, particularly John Chapman and Bill Reyer, and then

14 anyone either in the agency or your superiors, with the

15 Department of the Army leadership.

16 For the record, let me recount what we know to be

17 the case: That is, that the Iranians -- unbeknownst to you;

18 you simply knew that it was a customer — had asked the CIA

19 ;l for 234 line items of repair parts in varying quantities;

20 jj that that was transmitted indirectly from you to MICOM,

21 I going through some intermediate steps; and that as they

22 'I began to assess availability, the location of where these

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Vpv 1 'i parts were, it's my understanding that they prepared a

2 I document, which I will introduce as an exhibit in a few

3 i minutes, which showed whether these items were available and

4 j what the quantities were, what the replacement costs would

5 be, and whether there was any readiness impact.
i

6 I MICOM officials have indicated to us and they

7 ! indicated to the Department of the Army in the Inspector

8 General's report that with regard to some 46 or 47 of the

9 i items -- and there is some uncertainty as to which of those

10 two numbers it was -- that there would be some potential

11 readiness impact, and that was an initial determination made

12 on, I think, the first day when they started working the

13 I requirement, that if they were to provide them in the

14 quantities requested, that on 46 of the items there would be

15 some readiness impact.

16 . As I understand it, there was then some back-and-

17 forth whereby people at MICOM would say, "Well, we would

18 prefer not to provide that many of this item." The ultimate

19 M result was they didn't have to provide as many as initially

20 j requested.

21 So, from the 46, we peeled down that number,

22 I based on reductions in quantities, in order to determine the

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-^Vpv 1 i ultimate readiness impact.

2 ' Is there anything that I have recounted, in the

3 ■' interest of time, that you would take issue with?

4 I A That is all essentially correct, John. I see in

5 front of you one of the documents that I worked with. I

6 1 don't see the worksheets that I had. There were a bunch of

7 ; long ledger papers typed together. That was actually the
3 i detailed readiness analysis of the 46-47 items.

9 i _ MR. SAXON: Let me go ahead then to the next

10 exhibit, which I believe will be Exhibit 7, and ask that

11 that be marked.

12 (Whereupon, Deposition

13 Exhibit No. 7 was marked

14 for identification.)

15 MR. SAXON: I will give you a copy to look at.

16 BY MR. SAXON:

17 0 1 don't have any basis of knowing this from you -

18 - but the individuals at MICOM indicate, and there is a

19 !' handwritten note by MICOM at the top of page 1, that this

20 ji was faxed to AMC on 10 April '36 — I have no way of knowing

21 I whether you ever saw this document. So let me ask if this

22 I appears to be something that you recall having seen?

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"pv 1 :i A John, this is not the document I saw in its final

2 form. I am aware that this particular document was faxed bv

3 '■ AMC headquarters, the Office of Supply and Maintenance.

4 , This was prepared from the original documents

5 ^ that a gentleman from the agency had given me that same

6 I afternoon that I got it. We had hand-carried that list from

7 I that gentleman to AMC headquarters. They prepared this

8 . document over there at the headquarters and faxed it.

9 ' I later got a copy of the document I had sent to

10 MICOM, and the copies in my office we had retained were much

11 more worked with this, with many additional details written

12 : in.

13 0 Let me make sure I understand what you just said.

14 i Is it your understanding that this particular document,

15 Exhibit 7, was prepared at AMC?

16 A Yes, sir.

17 Q It's my understanding that it was prepared

13 physically at Redstone Arsenal, at MICOM, and then faxed into

19 ji AMC. If you look at the handwritten note at the top, that's

20 J! what it indicates.

21 I A I won't dispute that, only that about one day

22 I after I had taken over my list to John Rosenthal at AMC, he

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gave me back a copy of this. I think the discussion at that
time was that MICOM had all of the items on this list. I
had just jumped to the conclusion that AMC had prepared it.

But that's not so important as the fact that this
isn't the work copy that was kept in my office on the
project. We worked up a same copy so that John Chapman and
I and Bill Reyer could work on it.

0 My interest at this point is not what work
product you have, but simply to show you that at MICOM, as
you follow each item across, you see each item listed by its
national stock number and a brief description, the quantity
that was required, the quantity that was on hand, the
location. Those codes indicate a particular depo or
wherever that the item is located, the estimated replacement
cost.

And then under "Impact," the testimony we
received from MICOM was that if the word "Yes" appears, that
means that the potential was there for an adverse readiness
impact if the quantities requested were provided.

Now, let me specifically ask you what you recall
about your discussions with John Chapman and Bill Reyer, and
you can do it generally or you can break it up by individual

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on the readiness issue.

A Well/ John, I think it is important, before I
discuss readiness, to take about two minutes and tell you
that many of the figures that were provided on this list
that were provided very quickly by John Chapman turned out,
as we went to warehouse bins at depos to count things,
turned out that there were other figures. Some quantities
were greater and some were even less. Some weren't there at
all.

So this should not be represented as the final
truth.

Q And I don't think I represented it as that. But
that is helpful to know.

A John Chapman was the total professional as we
worked on this. I think that he strongly and vigorously
defended the interests of the Army throughout. He was
concerned about readiness.

I was concerned about readiness because readiness
is always an integral part of our examination of the support
of any project for the agency, and I believe it was at my
instruction that he put out the yeses and noes on this. It
could, however, have been General Russo's instructions. I

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don't remember. Somebody from the headquarters, though,
asked him to do this.

The discussions got more detailed as we got
closer to the end of the project, and again I am down to the
copies, and they were left in my notes when I departed the
office last June, the workpapers on the 46-47-odd items that
General Russo and I personally massaged. It's a paper that
measures probably two feet by 2-1/2 feet all put together in
one piece. That showed, in addition to all of this data,
production and delivery dates for placement of critical
items .

General Russo made the request for me to go back
to John Chapman and obtain that data later on in the project
when he was looking at the fact that supplying some of the
critical items.

I want to stop again and interject one more
thing. We started out with just a plain yes or no on these
impacts, but it came down to was the item critical to fire
the weapons successfully. And, John, I think I recall that
later on we even refined this impact further.

So items that sometimes were listed as critical,
yes, changed to not critical to fire the weapon

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sfully, and we did not eve;

successtuily, ana we did not even give some of those. In
other cases we may have depleted the supply, but John had
said, yes, it was not critical.

So another item on readiness that John and I
discussed in detail was that most of these parts -- not all,
but most of these parts -- we are requesting were not going
to have any impact at all on U.S. Army readiness because in
fact almost all these parts are something called pre-Phase
II product improvement-configured. They could not be used
in the modernized version of the system, which is what the
U.S. Army had. So we were generic.

He did say that there would be some impact on
current FMS customers. However, the strong MICOM attempt
was to get all the current customers for the Hawk system and
then get them modernized, which would have made them also
post-Phase II configured and would have in fact rendered
this material obsolete.

Can I help you any further?
0 That's helpful by way of background.

Now let me refine some questions from what you
said. Do you recall there being any discussion — and I am
going to confine these questions toward the later end

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because, as you said, these were massaged, the numbers

changed as they took a further look, they found some

\
quantities and others.

In any event, the initial column, with the 46 or

47 on this April 10th document changes, so as you get toward

6 .j the end of meeting the requirement, do you recall any
J ^

7 I discussion with John Chapman or anyone else at MICOM at that

■i

8 1 point that if we met the requirement in the quantities

9 I requested, there would be significant depletion of any items

10
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that were of critical importance?

A The answer is, yes, John and I did discuss it.
There would be significant depletion of some of the critical
items .

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John and I, by the way — John Chapman, that is,
and Bill Reyer and I and John — never had a disagreement on
what that perception of the truth was. And ray perception of
what they were telling me. We were parties to the agreement
throughout this project.

0 All right. You indicated the discussion with
John Chapman was to the effect that there would be
significant depletion of some of the items.

Do you recall a number as to how many items there
would be?

A I think we got down to less than 11 items at the
end. And, again, some of those 11 items were, in fact, ore-
phase two, if not all of them.

Q All right, that gets more specifically to my
question. Do you recall if any of them were common items
for subsequent readers of the deposition? "Common items"
means those items that were used on the pre-phase two and
the post-phase two? Or, in layman's language, the old Hawks
and the new Hawks?

A John, I can't right now. But, again, if we can
recover my working papers, it should show those details. I
had those details recorded at one time.

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Q But, in terms of your recollection now, do you
recall if any of the less than 11 items were common use
items?

A I don't recall that they could have been. I
would also tell you for the record that when I was up there
in November, those working papers were still in the office,
even though I'd been gone for six months.

That is, the master worksheet that should show
all fo the figuring on those parts.

0 - Of the — let's assume that since you don't
recall, but said some of them could be common use items,
let's assume that there were some

Do you recall any discussion of whether those
less than 11 items, for which there would be some depletion,
were in the high risk or critical category in terms of the
firing of the weapon?

A What I remember is that when we boiled finalists
down to the 11, that all of those 11 were!

All 11 were, is your recollection?

Yes, sir. That's the reason we made the decision

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to provide as many of them as we could. I could add that
General Russo and I entered into some decision-making at
this point on these items after Bill had given me the final
data and before I got back to John Chapman, we had further
massaged the data with the agency.

It was at the point where we boiled down to the
fact that there was going to be significant depletion of
i t e m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^1
General Russo asked me to go out and get manufacturing data
and find out when the replacements were going to flow back
into the system.

On some of them, John Chapman offered and it was
critical to our decision-making process that even though
there might only be three of an item in the entire Army
inventory, that he might on]

And so he could live with us on a small number of
items taking all the inventory out of the system on the
basis that there might not be any demand at all for any of
those items over quite a long period. And he would expect
that he would have been able to replace them through
manufacturing replacement, except in a couple of cases — I

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think on pre-phase two — he did not get any more orders in.

And there was a problem there in getting a
sufficiently large number of orders to give to the
manufacturer. He was going to actually wait until they had
another demand on some of his low demand items before he
even went and ordered them.

0 Let me see if I can synthesize what you're
saying, because this is important.

First, as to the number of items for which there
would be significant depletion, do you recall it as being
less than 11, or specifically 11?

A Just about 11, John. It might have been 12. It
might have been 10. But I remember our final list of items
^^^^^^^^^^^^^^^^^^^^^^^^Hthat were to

15 significant impact were about that many.

16 I Q And bv

17 ^^^^^^^that means they are important parts?
No. If I can interject here,

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Q On the one hand, you can say that the Army was
doing a very good job of seeing to it that the customer got
the parts they requested, since all 11, as you say, were

DUt, ll^there was going to be significant
depletion o^ some of these 11 parts from U.S. inventories,
if any of them would come into use, the argument could be
made then that we would be jeopardizing active Army units,
could it not?

A The argument could be made if you ignored the
manufacture and replacement times that we had worked out on
the items that we were significantly depleting.

But, if you take into account manufacturing and
replacement time and the very low demand on some of these

18 I items, you could argue that the impact on actual readiness

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was very minimal.

Q Let me ask you if you recall the discussion in
specifics oi

just

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because that's a significant item. But I don't remember any
more details than that about it.

0 Do you remember any discussions specifically with
Chapman or Reyer about

A John, I am sure we discussed it only because we
discussed each and every item in detail over the weeks of
the project. So, if John says we discussed it, he's
absolutely right.

But what we discussed I don't have the foggiest
idea, jyst that I know we worked all these figures.

Because, again, we had asked when we got down to
critical items how long would it take to get items back in
the inventory.

0 Let me tell you what the testimony is that's been
provided to us and see if any of this resonates and if you
recall that any of this was made known to you at the time.

Let me ask you if you recall a discussion to the

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A Sir, all the items that we were going to

significantly deplete were discussed at General Russo's

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level,

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0 Was there any discussion with representatives of
the agency that you did not want to provide some of these
items?

A YeS/ sir, there was.

0 What was the resolution?

A Well, if I could back up and add one more thing
to give this question a little depth. John, on some of the
critical use items, if there was going to be some depletion,
would offer substitute items. A lot of that was done.
There were quite a few substitutes provided. Some of them
were on the critical use. items.

Also, John was able to accelerate the production
for me on a number of items. And, again, I just don't
remember the on^^^^^^^^^^^^^^^^^Msut,
got down to our final list. General Russo asked me to get
back with the agency. That was his guidance.

When we got down to the final days, before we
agreed to preposition the thing, we were looking at the
actual numbers on my worksheet of when does this item come
back into production.

And John had also given me -- it was on that

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1 1 worksheet — the number of demands basically per year for a

2 three-year period.

3 I So» General Russo was able to see what we had on

4 hand, what was being requested, what we were getting back in

5 the inventory and when we would get a hold again.

6 All that was on his work copies. And he said,

7 Well, I don't think — generically, his comments were, I

8 don't think we can give them all these things, and I want

9 you to get^ back to them and pare this down.

10 . Basically, the —

11 0 I'm sorry? This is General Russo?

12 A General Russo talked to me. He was very

13 concerned about readiness. And, actually, we did cut things

14 down in some vociferous arguments. I made some recommended

15 cuts. Again, I'm doing the technical work now. And, again,

16 I'm consulting with John Chapman, not doing it in a vacuum.

17 We talked about some numbers that ought to be cut

18 down. I went over and offered those to the agency and in a

19 I vigorous session, we restored some of the figures.

20 ; And, again, you have to keep in mind I'm kind of

21 I the working official left to come up with the specific

22 I number. And when I finally gave those all back to General

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"^"^V/bc 1 Russo, I think the right word for his reaction to it was

2 ! acceptance^

3 I 0 Do you recall ifl

4 \ specifically discussed with your counterpart at the CIA?

5 A Sir, we discussed all of the critical use items

6 that were going to be significant, in depth and in detail.

7 I Q If the Iranians requestec
I H^^^^^^^^^^^^^^H which we — show

9 you that document in a moment -- would that mean -- and if

10 all of these 11 or so were specifically discussed with the

11 Ij agency, would that mean that they basically overruled your

12 ij judgments on readiness and said you've got to provide them?

13 M A I wouldn't say that. Another item that entered

14 .! into this factor in there near the end was, about the time
1

15 we came down to all the critical use items, John Chapman

16 . started to challenge. And he did a very good job of this,

17 I again, as I say. For the record, he vigorously defended the

18 |i Army's interests.

19 I' He challenged a number of these critical use

20 I items, saying that only one of them was required per system.

21 I And he was wanting me to get from my counterpart at the CIA

22 I the actual numbered systems.

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He also asked the specific question: Were all of

these items going to replace broken parts and were all the
systems currently being used. And he pointed out that he
was at that time vigorously trying — that is, he, John
Chapman -- was trying to get the actual serial numbers of
the systems, which he said he could then come up with
basically work data on and tell me whether or not they even
needed all of these items.

Again, I was unable to successfully get that.
But that was part of the factoring of the decision. So John

11 I was really a full participant in influencing me.

12 ' But, the bottom line is it was basically left to

13 I me to make the decisions on the actual numbers. And I

14 ' didn't do it in a vacuum.

15 Q Was there anything in your discussions with the
agency abou^^^^^^^^^^^^^^|that

17 ' different from the treatment of the other items?

13 i' A Again, if you tell me it was a critical item, I'm

19
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kind of at a disadvantage without ray working papers. That
would bring back a lot of details.

But I don't remember anything specific at all
about^^^^^^^^^^^^^Hwithout those notes.

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0 And nothing in terras of your memory now? Nothing
stands about^^^^^^^^^^^^^^Kt brea)(s

of the category of the 11 or so?

A No.

0 I think you've answered this, but let me ask it
specifically for the record.

Was there anything on behalf of your agency
counterparts that they said, that would suggest a greater

by the in^^^^^^^^^^^^^^Hthan any other

repair part?

A No. But I think it's important to note that when
I went to meet with John and with my counterpart at the
Agency on my recommended reductions to his list, two
significant items occurred at this time.

One of them was that some of the substitutes I
offered, he clearly had a price limit on this project. And
he, himself, killed some numbers that I had offered on the
substitutes — a substantial number in some cases were cut
down.

Again, I reiterate substantial. But that wasn't
on the day I took the list over to him. He got back to me,
as I recall, about 48 to 72 hours later with his cuts. And

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1 ;j he physically came to see me in the Pentagon and brought

2 'j back his cuts.

3 11 He cut a large number of items. That was so he

4 :l could, in fact, fund, he told me. And he did tell me, in

5 i| fact, he was bumping up against the price ceiling. Then he

6 I asked me to restore some of the other critical items.

7 :l And I guess that, since I had the production

■|

8 replacement data and since I was talking to John pretty

9 regularly, I think that my mind set at the time was, you

10 know, that the highest leadership of the Defense Department

11 had already dictated our support on this.

12 I And what we had boiled down to at the end is we

13 I only had a small number of parts that were actually going to

14 have a significant impact no the long-range.

15 MR. SAXON: Let me ask you to look then at the

16 next exhibit.

17 I ask that this be marked as Exhibit 8.

18 (Deposition Exhibit 8 identified.)

19 ;| BY MR. SAXON:
i;

20 ■; Q This is what we were provided by MICOM as the

21 1 final list of what they were given, of what they must

22 I actually ship.

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If you look at the cover sheet, it's from
Headquarters DA to Headquarters MICOM. And the office
symbol of DALO, the Department of Army Logistics Office.

This was sent on the 23rd of April, 1986. Let me
ask you first if you prepared this document or had anything
to do with its preparation.

A John, this looks very familiar. It's not that
all the parts here -- there were technical instructions both
before and after this list, but this looks like the format
that I provided to John Chapman.

0 Am I correct, in his representation, that this is
the sort of Must Ship These list that DA provided to MICOM?

A Yes. And I would mention that before we sent
this, John and I had actually gone over all the details of
the message over a phone. That is, we had gone down item
No. 9, quantity of five, this is the price.

In other words, this is extremely well-rehearsed.
And I might add that before the date that this went out, I
think it went out immediately, prepared about three weeks

earlier and rehearsed in great detail with John.

I So that, if, for any reason, there was a

' disconnect communication or anything else, he already had

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working papers separate from the message that confirmed.

This was kind of like the formal document of
accountability, that is, the official DA instructions to
ship. The details are on this message John had on the

5 ' working papers, right down to the last item in the price

Let me ask you for the record to look at page 2

7 I of each of these two Hawk repair part exhibi

Would I be correct then —

Do we have the same page 2, John?

Yes.

Sorry .

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A But I don't know what the details were. Again,

my working papers, we may have found more of these items.

There's an important omission here. Not to have
the working papers that show how the decision process
worked .

0 Do you have any knowledge of the extent to which

General Russo made anyone above him in the Army leadership
aware of any readiness problem with the Hawk repair parts?

A Sir, I wasn't privy to those discussions, if any.

0 So, if he had, you weren't made aware of that?

A No. But, again, speaking generically, it was

General Russo' s habit to keep DCSLOG informed on all keys
used.

Q For the record, that would be Lt. Gen. Benjamin

17 ! F. Register, the Deputy Chief of Staff?

18 , A Now retired.

19
20
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22

Q When you testified in your deposition on June
1st, you indicated that the readiness impact on the Hawk
repair parts which were provided, you thought, would have
been confined to our FMS customers, today, you suggest that

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"■"■'/be 1 I you recall that some of these 11 items probably were — and

2 I don't want to be unfair. If I mischaracter ize this, so

3 ! correct me — but you thought probably some of them were

4 common use items.

5 What can you tell me further on that? Do you

6 have any specific recollection that any were common use

7 items?

8 A Mot on any specific item. Again, I keep coming

9 back to my worksheets. I had kept detailed notes on how the

10 decision process actually worked, and they should still be

11 available; they were in November.

12 And somebody, I'm sure, has them.

13 Q I'm not sure if that's responsive totally. I

14 understand if you don't have specific detailed knowledge,

15 which means that you might not know if it was two or four or

16 how many or whatever.

17 To the best of your recollection, were any of the
13 II items, which would result in significant depletion,

19 common use items?

20 A There may have been some, John. My memory is

21 I just fuzzy on that.

22 I But the testimony I gave you in June is

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esseatially correct. The impact on U.S. Army readiness by
shipping pre-phase two Hawk parts was going to be minimal
overall, and to narrowly focus on only a couple of parts.

You can take a look at any Defense system and
say, you know, a couple of parts missing. You know, have
the manufacturer accelerate that production.

0 Do you recall any statement by John Chapman or
Bill Reyer to the effect that^^^^^^^^^K ^ if it
were either not functioning or missing, woul
[the Hawk missile system?
A John, that sounds

Again, I remember nothing specifically about
that. But when we had boiled down, as I mentioned earlier
today, to the small number of items, all of them|
|to the successful firing of the weapon.
0 Is that the same as saying that if it were either
defective or a replacement were not available on any of
these 11, that, in your judgment, it woul

A .That was John's technical provision to me on all
of the items we discussed, yes, sir.

0 Was there ever any discussion that General Russo

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should take this knowledge beyond the level perhaps of the
DCSLOG and discuss it with the Chief of Staff of the Army,
the Secretary of the Army or with General Powell?

A I would tell you, in the discussions I had with
John Chapman and Bill Reyer, they never discussed -- they
knew I was discussing readiness issues with General Russo.
They knew that because I had told them who was looking at
it.

They had not asked. That had come out in the
course of reviewing the items, of changing the numbers.
They never offered or suggested that I go to anybody else
with readiness data.

0 I understand that, although that wasn't my
question.

Did General Russo, to your knowledge, was there
ever any discussion with General Russo knowing that there
might be just under a dozen parts that were of sufficient
criticality that they^^^^^^^^Ha Hawk missile system,

19 ll that that level of knowledge should be carried to people

20 'i higher in the Army leadership or, in fact, to OSD?

21
22

A Sir, General Russo didn't make me privy to that

decision process.

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Q There was no discussion that you had with him

along the lines --

A I didn't recommend him going to OSD. Again, this

was significantly differjnt than our normal projects. I was
not even, in the course of normal events, able to take
projects to the DCSLOG for signature if they were going to
have a negative impact on readiness, because General
Thurman's practice had been, over the years, not to approve
things that negatively impacted on readiness.

So, if this had been a normal request coming down
through the Joint Staff, we would have probably recommended
nonsupport of it. And that would have been the fornal staff
paper going back up.

But this was top-driven. So I wouldn't have
offered to General Russo to go and take something to the
Joint Staff or to the Secretary. I mean, I would have if it
had been a different type of request.

0 When you testified in your deposition in June,

and don't misunderstand me in these questions, I'm not
trying to show inconsistencies or pin you down. I'm simply
trying to understand what your best recollection is now.
Your testimony then was that there would have

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been no more than about a half dozen items that there would
have been significant depletion on that were of any
critical ity?

A I don't think my opinion changes any on that,

some of the items out of that 11 or dozen. We left some in
the inventory and, in fact, John Chapman's estimate was that
he'd be able to have production come back on, even thougn we
were significantly depleting his estimate of the impact en
readiness was minimal.

So the testimony from June is still the same. I
think it was about half a dozen we were actually going to
get down to it. There was a pretty long lead time to get
the Army whole again.

I've talked about as much as 18 months, I think,
on a couple of items. So the testimony is the same.

MR. SAXON: I think that's all that I've got,
folks.

MR. GENZMAN: Can I follow up on a couple of
questions you just had?

EXAMINATION

BY MR. GENZMAN:
0 ^®9="ff*f§S^'¥ i'lfi^ct _on readiness, I may have

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1 ] misheard you. But I heard you mention that with regard to a

2 small number of items, there might have been the result of

3 'I deadlining the system.

4 I Can you define for us what "deadlining the

5 ' system" means to you?

6 . A Sure. Since I've been out in a few infantry

7 ! divisions, deadlining tr.e system means that it can't

8 ; function as it's supposed to be by the manufacturer.

9 I In other words, we're back to the thing that Bill

10 Reyer said, or John Chapman said: This is critical to

11 \ successful firing of the weapon, to hit the target 100
i

12 , percent of the time. The Hawk missile system is highly

13 i accurate when it's operating properly.

14 Lots of parts on it though aren' t critical to

15 successful firing of the system. If you lose one of those

16 parts and you can't successfully fire it and hit the target,

17 the guy out in the field unit is going to say he's deadlined

18 that until he gets the part. He normally will deadline that

19 I' if it is something that is missing.

20 . Nonmission-capable supply. That's the term used

21 I out in the field. And that's how it's put on the readiness
22

reports ,

UNCLASSIFIED

Ace-Feder-al Reporters. Inc.

809

0950 06 06

'/be

UNCLASS5?riiD

1
2
3
4

5
6

7
8
9
10
11
12
13
14
15
16
17
13
19
20
21
22

Q With regard to the Hawk system, could you tell u;

what the components of that system are so that we're clear?

A Well, you've got a radar. You've got a computer,

Let me just tell you, I think that the other part is the
guidance system, but I'm not positive all these months
later. I'm not really a field artillery guy myself, but
there's three major components to it.

0 How many launchers use that particular system of

three components?

A Well, I don't want to mix up Hawk with any other

kind of system. A Hawk generically is like comparing a
Chevy Cadillac to a Volkswagen. They are just two
completely different models. You can't take any other
weapon system and say it's like any other one, except that
you might have some common use items in the DoD supply
system, like the little rubber gasket or screw.

Most of the items on that system are going to be
unique. You might have some circuit boards or some other
things. But most of the items are going to be unique to
that system.

UNCLASSIFIED

Ace-Feder_-\l Reportfrs. Inc

810

0950 07 07

^INCUSSIFiEB

Q Let me try to focus what my concern is. As a

2 J layman, I'm not sure how missiles can be launched as a

3 result of deadlining what you call the system.
I

4 : A I don't know enough about the rate of firing the

5 ] system.

6 0 How many launches are connected to the system?

7 I A You're only going to fire one missile at a time

8 in one launch operation, basically.
i

9 '! 0 Out of one system?

But the launcher isn't really the part that

11 i breaks down, ^^^^^^

12 ! ^^^^^^^^^^^^iThose are where all the little parts are;

13 'I that launcher is probably going to work time after time

14 I after time.

15 I don't think that too many of these parts have

16 ! to do with the launcher.

17 MR. SAXON: For the record, and I should have

18 ii made this clear in this deposition, the
19

20 i;

21
22

BY MR. GENZMAN:

So, when you say a particular breakdown would

UNCLASSIFIED

Acf-Federal Reporters. Inc

811

0950 07 07

.'/be

UNCLASSiFiED

1 ;] deadline the system, you're referring to a given _^^ation
I

2 ,| which has these component parts and a launcher and more than

3 I one Hawk missile?

4 A Trying to speak generically, for any layman, you
1

5 would say that any part that would be missing or

6 ■ inoperative, that you could not guide the system and land

7 1 the missile on the target when you wanted to; then the

8 system would not be operating as intended and it would be

9 deadlined.

10 Q The point I'm trying to make is whether or not a

11 system controls one launcher, one missile or a hundred

12 launchers or a hundred missiles.

13 ' A No. One radar system will fire one missile at a

14 time. That's really what it does.

15 MR. GEN2MAN: That clarifies it for me.
15 I have nothing further.

17 MR. SABA: I'm all right.

18 MR. SAXON: Let's go off the record a second.

19 j (Discussion off the record.)

20 I MR. SAXON: Let's go back on the record.

21 FURTHER EXAMINATION

22 i BY MR. SAXON:

UNCLASSiFiED

Ace-Feder.al Reporters. Inc.

812

0950 07 07
- - v/bc 1

UNCLASSk w

Major Simpson, it's ray understanding that in a

7 :!

Would that be your understanding?

John, I think the easiest thing I could tell you

i] is I'm not that technically proficient to give you a good

12 i answer on that.

:|
ii

13 I MR. SAXON: If my colleagues from the House have

14 ' nothing further, let me simply say on behalf of both of our

Committees that we thank you for your time today, for the

16 time on two previous occasions you've spent with us. And

17 i you've been very helpful to us as we've attempted to piece

]

18 this altogether.

19 || THE WITNESS: Thank you, John.

20 ij (Whereupon, at 3:50 p.m., the taking of the

21
22

deposition ceased.)

UNCUSSIB^^

Ace-Federal Reporters. Inc

813

UNCLASSira

CERTIFICATE OF NOTARY PUBLIC & REPORTER "^^

I, DAVID L. HOFFMAN the officer before whom
the foregoing deposition was taken, do hereby certify
that the witness whose testimony appears m the
foregoing deposition was duly sworn by .-ne ; that
the testimony of said witness was taken in shorthand
and thereafter reduced to typewriting by me or under
my direction; that said deposition is a true record
of the testimony given by said witness; that I am
neither counsel for, related to, nor employed by
any of the parties to the action in which this
deposition was taken; and, further, that I am not
a relative or employee of any attorney or counsel
employed by the parties hereto, nor financially
or otherwise interested in the outcome of this action.

Notary Public in and for the
District of Columbia

My Commission Expires

UNCLASSIFIED

814

815

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CUSSIFICATION
remarks:

NUnaER f SrCWATWe"

DATE-TIME

^RECEOEH

remarks: ' ' -^

UPON RECEIPT OF THIS e.J,.„r.-. ■• ftLWHOm HUN»M

C«1PT OF THIS f*SCI«ILE'«ESSAOE FOR FICitUP. AOOHmEE |'>i

«"U£.T« TO «««OWLEOOE rScE^PT TO 0R,6,„*T0R AT TELSPHONE XUHij

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Oeclassitied/Released onii_£c£^£g
under provisions o( E 0 12356
by K Johnson, National Security Council

•■TO Ul« - :.vj»:^ ^i «

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ELECTRONIC COMPONENT 1430004812779

CONTROL POWER SUPPLY
CIRCniT CARD XSSV
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SIKOLATOR, CONTROL
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1430004804461
143001.408249$
1430004916943
5360009373080

1430001558288
14300087S0838

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PAN CENTRI7UGAL
FAN, CIRCULATING
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TANK SECTION, FLUID

FILTER, FLUID

SWITCH, DELAY LINE

CONTROL FRQE
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SIMULATOR, STATION

1430004805642
4140008759846
4140004634276
6120004812766

1430002287848
1430000205562
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2,002.00
282,00
242.00

1,287.00

3,414.00
2,443.00
84.78
3,031.00
6,175.00
9,815.00

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144000646834

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(i> uneussiF'to

856

857

DEPOSITION OF THOMAS C. SINCLAIR

Thursday, February 5, 1987

House of Representatives,

Select Committee to Investigate Covert
Arms Transactions with Iran,

Washington, D.C.

The select committee met, pursuant to call, at 10:40
a.m., in Room 2226, Rayburn House Office Building, George
W. Van Cleve, Deputy Republican Counsel for the House Select
Committee to Investigate Covert Arms Transactions with Iran
presiding.

^■■l.a;;y Dec;;,ssifi,!-;/Release.^ on .^^gcfl?

^''^^' ''^"cna. oecurity Coundl
<• Johnson

c?U

3f <^^Tas«»

858

UltOEASSHlfiDr

APPEARANCES

GEORGE W. VAN CLEVE
5 Deputy Republican Counsel

for the Ho-ise Select Committee to
° Investigate Covert Arms Transactions

with Iran
7 U.S. House of Representatives,

Washington, D.C. 20515
8

9 HENRY SIMPSON

Counsel for Baggett Transportation Company
"•O 1700 First Alabama Bank Building

Birmingham, Alabama 35203
11

12 Also present;

13 ROBERT L. NUNNALLY
Executive Vice President/Treasurer
Baggett Transportation Company
2 South 32nd Street

15 Birmingham, Alabama 35203

16
17
18
19
20
21
22
23
24
25

mUHASSlElED-

859

2 here-
3

mmm

MR. VAN CLEVE: Let me do a brief introduction

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

For the record, I am George Van Cleve, the
Deputy Republican Counsel for the House Select Committee to
investigate Covert Arms Transactions with Iran.

Here today are Mr. T. C. Sinclair, President of
7 Baggett Transportation Company —

MR. SIMPSON: And Robert L. Nunnally, Executive
Vice President of the Baggett Transportation Company, and I
am Henry Simpson, counsel for Baggett Transportation Company.

MR. VAN CLEVE: Let me make clear for the record
that the witness is appearing today pursuant to a subpoena
from the House of Representatives pursuant to House Resolu-
tion 12, 100th Congress, first session, and has appeared and
produced documents responsive to that subpoena.
He is accompanied by his attorney,
we very much appreciate your willingness to be

here this .morning.

The second thing I think we ought to have clear on
the record is that given the nature of some of the informa-
tion that may be discussed this morning, everyone who is
here present at the deposition, including the reporter, has
received appropriate security clearances and all portions of
this transcript will be treated as a classified document.
Did you have an openinq statement?

860

UNSumeir''

1 MR. SIMPSON: We are appearing in response solely

2 to the subpoena.

3 Baggett has undertakings with the Department of

4 Defense concerning security, probably most of which is com-

5 pletely unrelated to the task of this committee, but which

6 we must observe and we are proceeding on the assurance that

7 the transcript and all documents produced will receive the

8 secret classified treatment upon counsel's assurance that it

9 is permissible with that clearance for the testimony to pro-

10 ceed.

11 MR. VAN CLEVE: I would like to reiterate that you

12 have my assurance on that.

13 With that, I have not myself had an opportunity

14 to review the documents that you have brought with you today,

15 but I see that there is an index of materials that have been
1g produced, and if I might just briefly make sure that I know
17 what is in front of me —

13 MR. SIMPSON: This is an index of material we have

19 brought. It has not all been produced. Some of it, since

20 it is financial statements you may think will clutter the

21 record and be irrelevant.

22 We have attempted to respond fully to the

23 subpoena and that is an index of the documents we have here.

24 MR. VAN CLEVE: I appreciate that.

25 One of the things that we will do in the course of

llNCLAil&lQEIL

861

wsmh

1 the deposition is to go through and niark the various

2 documents as exhibits to the transcript. They will receive

3 the same treatment as classified material, as the transcript

4 will until further action by the House committee.

5 With that introduction, I wonder if I could ask

6 Mr. Sinclair to go through the documents and tell me what we

7 have here just in very general terms and then I am going to

8 proceed to question you about the documents.

9 (Discussion off the record. )

10 MR. VAN CLEVE: Back on the record, please.

11 I would like to have a document that is labeled

12 "Index of Materials Produced" identified as Sinclair Exhibit

13 1, please.

14 (Whereupon, the document referred to was marked

15 Sinclair Deposition Exhibit No. 1 for identification.)
16
17
18
19
20
21
22
23
24
25

uNHi mmL_

862

12
13

mmm

THEREUPON

THOMAS C. SINCLAIR
was called as a witness and testified as follows:
EXAMINATION BY MR. VAN CLEVE :
^ Q Mr. Sinclair, I would like to show you a copy of

" Sinclair Exhibit 1 and ask you to please explain which of the
' categories of documents shown on this index have physically
° been produced for inspection by the committee today.

° A All of the 11 items named in the index are in the

room for inspection.

Q Thank you very much.

We have a large pile of computer materials which
appear to be originals, and if I understood correctly, these
are materials responsive to our corresponding with items

15 4 and 5 on the production index?

16 A Yes .

17 Q And they are labeled, as I understand it, with

18 appropriate numbers to show whether they respond to item 4

19 on the materials index or item 5 on the materials index?

20 A Correct .

21 Q Thank you.

22 As I understand it, you are willing to leave these

23 with the committee —

24 A Yes.

25 Q Thank you.

863

UWSiii

1 Turning then to item No. 1, the Baggett Transporta-

2 tion Company organizational chart, I wonder if I might have a

3 copy of that document to review.

4 (Document proffered.)

5 MR. VAN CLEVE: Could we mark a document labeled

6 "Organizational Chart, Baggett Treuisportation Company,

7 Birmingham, Alabama," as Sinclair Exhibit No. 2, please.

8 (Whereupon, the document referred to was marked

9 Sinclair Deposition Exhibit No. 2 for identification.)

10 MR. SIMPSON: Let me just comment that that does

11 have a date of July 30, 1984, which was the last written chart

12 of this type that we developed. It is in some respects not

13 current.

14 MR. VAN CLEVE: I wonder if I might ask Mr.

15 Sinclair —

16 BY MR. VAN CLEVE:

17 Q Looking at Sinclair Exhibit 2, could you indicate

18 for me in what major respects this orgemization chart would

19 not be current today, not necessarily specific lower level

20 personnel, but either in terms of the overall structure or

21 some of the people at the senior vice president level? I

22 wonder whether those have changed?

23 A No changes there.

24 Q So this is substantially accurate as far as the

25 current organization of the compeiny and its senior personnel?

864

UNIiUSSiaEil

1 A Right.

2 Q Turning now to item No. 2 on the schedule of

3 subsidiaries, do you have a copy of that document present

4 for us to examine?

5 A Yes.

6 MR. VAN CLEVE: Could we have a document entitled

7 "Schedule of Baggett Transportation Company and Subsidiaries

8 and Its Affiliates as of 1-28-78" marked as Sinclair Exhibit

9 No. 3, please.

10 (Whereupon, the document referred to was marked

11 Sinclair Deposition Exhibit No. 3 for identification.)

12 MR. VAN CLEVE: I have had an opportunity to briefly

13 review Sinclair Exhibit No. 3 and at present I have no

14 questions on that document.

15 Turning now to item 4 on the index, the

16 Department of Defense shipments manifest, this is described

17 on the index of production as shipments listed by origin for

18 years 1984, 1985, and 1986; shipments listed by destination

19 for years 1984, 1985, and 1986.

20 Could we have all of the materials marked within

21 item 4 here identified as Sinclair Exhibit No. 4, please.

22 (Whereupon, the documents referred to were marked

23 Sinclair Deposition Exhibit No. 4 for identification.)

24 BY MR. VAN CLEVE:

25 Q Mr. Sinclair, I should have done this previously,

XHm h LnddtMBjiwi

865

masmh

' but I want to make sure that you are completely comfortable

^ in answering my questions and, therefore, if at any time I

•^ ask you a question and it is not clear or you are not sure you

^ understand it, I hope you will stop me and ask me to explain

5 the question.

° Similarly, if at any point you feel a need to speak

7 with your counsel, please go ahead and do that before you

8 answer a question.

9 With respect to the Department of Defense shipments

10 manifest material now marked as Sinclair Exhibit No. 4,

11 Mr. Sinclair, very briefly, sir, what is the purpose for which

12 this material is maintained by Baggett Transportation Company?

13 A We maintain a manifest of all shipments moved for

14 all customers for our own records.

15 Q And a manifest, so that I am clear on this, is

16 exactly what?

17 A The financial record of the company.

18 Q A financial record?

19 A Yes.

20 Q So that a shipment manifest is what kind of

21 document; what does it tell you as an official of the company

22 if you review it?

23 A That particular manifest tells me the origin, the

24 destination of the shipment, the customer, the revenue pro-

25 duced by the load, the number of miles it traveled. It

imASSML.

866

'''S:\rM^^

1 generally gives you all the information with respect to the

2 movement that can be supported by other documents.

3 Q That can be supported by other documents?

4 A Yes.

5 Q Does it tell you the nature of the cargo?

6 A No.

7 Q Is there other documentation maintained by the

8 company that would identify the nature of the cargo, just

9 purely for informational purposes?

10 A I understand.

11 The bills covering each shipment give you the

12 Department of Transportation classification of that shipment,

13 but not necessarily specifically what it is.

14 Q Okay, but you do maintain — is that for

15 reporting purposes to the Department of Transportation that

16 you maintain a classification —

17 A No, for compliance with their hazards material

18 rule.

19 Q So basically there would be a broad distinction

20 between hazardous and non-hazardous materials?

21 A Yes.

22 Q If I might briefly sumraarize what I understand

23 you have told me about the nature of the manifest, it will

24 tell you as a company official and will tell me if I under-

25 stand the various entries, the origin of the shipment.

iiMp-i hmM

867

1 destination of the shipment, revenue produced by the shipment,

2 the number of miles in the shipment, and the weight of the

3 shipment?

4 Have I got the basic purpose correct?

5 A Yes.

6 Q Is the format of these shipments manifest

7 consistent throughout these documents? In other words, if

8 we look at one page of this and I understand what is on here ,

9 I will be able to read the whole document?

10 A That is correct.

11 Q ' Looking at page 1 of what is marked Exhibit 4 ,

12 just to make sure I understand how this works, I ask you to

13 read through the various columns for me and either say that is

14 precisely what it tells you when it says origin or if it is

15 destination and so on, if anything is abbreviated —

16 A The document is a listing by destination. I believe

17 I could make a more clear explanation with the same document.

18 Q I will be happy to replace this then with a

19 similar document. It appears to me that there are two sets of

20 materials here.

21 A All three of those are destination and all three of

22 those are origin for three years.

23 Q Are all the destination documents marked with 4-B;

24 is that correct?
A Yes.

IMIAS^IEIOL

868

Q And all the origin documents are marked 4 -A?
A Yes.

Q If we could ask you to look at the document and
walk us through it.
^ By the way, I appreciate your bearing with me. As

" you probably can tell, 1 have never worked in a cargo
business.

A Exhibit 4-A that you have given me is a listing of
^ all the shipments handled by our company in the year 1984
'^ listed by origin. Those origins are listed alphabetically
^^ by state of origin.

The first shipment originated in Anniston, Alabama,
and was destined for New Orleans, Louisiana. That shipment
consisted of one load, had one PRO number —
Q A load is a container —

A Or a trailer or some other conveyance which is a
complete load. And the PRO number is the weigh bill that we
cut on each shipment we handle.

Q If I might stop you there, the weigh bill, what

20 does that tell you?

21 A We have copies of those in the room if you want to

22 see one later
Q Okay .

24 A The actual weight of that shipment is indicated

25 as being 19,170. iW* tWife^cL 40(1 jai^^and produced a revenue

lomiimL

869

13
14
15
16
17
18
19
20
21
22
23
24
25

wmB^

^ of $540

2 Q That is the precise statement that your company

2 received for that particular shipment?

4 A That is correct.

5 Q Is there anything else that this document would
g tell you other than what you have just described for me?

A No. That is the extent of it

Q Q Okay. Thank you

g Looking now very briefly at a destination document,

it appears to be set up in a very similar way, but simply to
be listed or organized alphabetically by state, by destination

^2 A By state and destination.

Q So there should be an entry on this destination
listing for every entry on the origin listing during a partic-
ular year?

A Right .

Q If I understood what you said earlier. Exhibit 4
is a listing of all the shipments by Baggett Transportation
Company during that particular year, not just for a particular
customer, but all the shipments?

A No. This is for or related to the United states
Government.

Q Solely for the Department of Defense or for other
government entities as well? Be as general as you like. This
is all government-related shipments by Baggett Transportation?

UMCLASSIEIEJL

870

1 A That is correct .

2 Q That would include all of your subsidiary

3 companies as well?

^ A The subsidiary companies have nothing to do with

5 the transportation company. This is solely the transportation

company .

7 Q And that is all you do in the way of freight

8 moving?

9 A Correct.

10 Q So what we have here in Exhibit 4 , and correct me

11 if I am wrong, is a complete listing of all shipments per-

12 formed for the United States Government by Baggett Transporta-

13 tion Company in a particular year and for the years 1984

14 through 1986?

15 A That is correct.

16 Q Is there 2uiy law or regulation under which you

17 might be either permitted or required not to show a shipment

18 on this listing?

19 A I am not aware of one .

20 Q So that it is your testimony that if your company

21 was involved in such a shipment for the government during the

22 years 1984 to 1986, it will be reflected on these documents?

23 A Yes.

24 Q Thank you.

25 MR. SIMPSON: If it is a U.S. Government shipment.

871

mmsiHEB'''

' according to the shipper's originating information; is that

2 correct?

3 THE WITNESS: We better go off the record.
* MR. SIMPSON: He asked you if this was all

5 shipments and it is, of course, not all the company's ship-

° ments . It is all the shipments that was the government.

7 THE WITNESS: That is what I said.

8 BY MR. VAN CLEVE:

9 Q If a private individual were to come to you —

10 let me put it the other way around -- if someone were to come

11 to you and ask you to make a shipment of material and stated

12 that it was being done for a private individual, do you have

13 any reason to inquire as to the actual identity of the shipper

14 or do you accept whatever representation is made to you?

15 A We hold ourselves out to serve the general public

16 as well.

17 Q So when someone says, "I have a shipment I would

18 like you to move," it is not your responsibility to determine

19 who actually is making that shipment, am I correct about that?

20 A As far as the movement of the shipment and the

21 authority to move it, we have no responsibility for it, but we

22 do have some responsibility to our company to be assured that

23 someone is shipping it who will pay for the movement so we

24 can protect our position.

25 Q From the financial point of view, but in terms of

iiMoi ACQinrn

872

wm^fli^^'

' the precise identity — I am making sure I understand things
2 here — suppose that an entity which gave its address as
^ Geneva, Switzerl«md, and were represented by, say, a local

attorney, came down to you and asked you to ship some material
° it would not be a matter of particular concern to you what the
^ precise identity of the Geneva company was? You would simply

7 want to know whether you were going to get paid for the

8 freight?

9 A That is correct.

"10 Q Is that true for the nature of the shipment? If I
^^ came to you and told you this was spare parts for machinery
12 and, in fact, I were moving some sort of hazardous material,
is it your responsibility to determine whether or not it is
hazardous material or can you simply accept my word for what-
ever it is?

16 A It is our responsibility to be aware of the nature

17 of the commodity being transported and we require in any

18 hazardous mater iaf'a^curleJ.figat ion on the bill, the extent

19 of the hazard of that material. If someone lies and seals a

20 trailer or container and simply falsifies the document in

21 connection with it, we wouldn't be pleased about it, but we

22 would have no way of knowing it.

23 Q You don't actually break the seals, in other words?

24 A We are not allowed to.

25 Q Thank you for that. I see.

873

ijd^i^iiei'

1 Earlier there was some discussion about a particular

2 set of shipments during the years 1984 to 1986. I may refer

3 to that from time to time as the relevant period, and those

4 will be the years that I mean if I do.

5 Are those shipments marked in any way on Exhibit

6 No . 4 ?

7 A They are not actually marked, but you have

8 Exhibit No. 5, which details those shipments.

9 Q That is what 1 was abOtft to come to.

10 '^^S<5 this is a general record that you have no mark-

11 ings on it which would indicate one way or another whether

12 particular shipments were of interest to the committee?

13 A Correct.

14 Q But those shipments you said are represented in

15 Exhibit No. 5 would appear in Exhibit 4?

16 A Some of those may be highlighted with a yellow

17 marker. Some may be. I don't recall. I think maybe they —

18 MR. SIMPSON: Off the record a minute.

19 MR. VAN CLEVE: Off the record, please.

20 (Discussion off the record.)

21 MR. VAN CLEVE: Back on the record.

22 Mr. Nunnally, referring to Exhibit 4, vbSHh

23 we haVe been discussing with Mr. Sinclair, would you please

24 explain the nature of this in conneCCiOfCfflth your company's

25 overall business?

ii&im^ou^

874

mmsra

1 MR. NUNNALLY: Exhibit No. 4, which is shipments

2 listed by origin for years 1984, 1985 and 1986, is a summary

3 of shipments that we moved for the Unites States Government

4 embracing the full year and not a detailed manifest of each

5 shipment.

6 MR. VAN CLEVE: So, for example, just taking an

7 entry from page 1 of a document marked 4-A, a listing by

8 origin, there is an entry here that shows as the origin by

9 name, Alabama; destination. Red Stone Arsenal, Alabama; and

10 the number of loads as 23.

11 It is your testimony that from this document, we

12 cannot tell — correct me if I am wrong — whether or not this

13 represents 2 3 loads that were carried as part of one shipment

14 or 2 3 loads that were carried during the entire year of 1984;

15 is that correct?

16 MR. NUNNALLY: Yes.

17 _

18 MR. VAN CLEVE: Gentlemen, we need to get this

19 clear on the record.

20 MR. SIMPSON: Go ahead. These are computer

21 records and between the two of these gentlemen, we will get it

22 straight.

23 MR. NUNNALLY: You got two things — go back.

24 MR. VAN CLEVE: Did I happen tl5*?B.ck an

25 exeunple —

ufJIitliviiliil^lE itf

875

UNfigi^FI^'''

MR. NUNNALLY: In this instance here, you have
got the number of loads and the number of PROs is the same.

MR. VAN CLEVE: What does that mean?

MR. NUNNALLY: That there was one bill of lading
for each shipment.

MR. VAN CLEVE: The PROS means what?

MR. NUNNALLY: Weigh bill number.

MR. VAN CLEVE: How is it then possible for you to
determine the connection between the number of loads and the
number of PROs?

MR. NUNNALLY: You can have a weigh bill which is a
master which will cover more than one load of freight, so you
could have one weigh bill representing six loads of freight.

MR. VAN CLEVE: And how would that show up on this
document? There would be an entry in the column for PROs
that would say one and an entry in the load column that would
say six; is that correct?

BY MR. VAN CLEVE:
Q Looking at page No. 34 of the first document
marked as Subsection 4-A of Exhibit 4, the witness has drawn
my attention to an entry in the first large group of entries
on page 34 and I would ask you to read through the entire
line just so we could have it clearly identified and then
explain the significance of the connection between loads and
PROS.

UNtLASSMl.

876

l»!i*.SSiaHt

1 A The origin of these shipments was early. New

2 Jersey with a destination of Charleston, South Carolina. We

3 had 18 loads move during 1984 between those points.

4 We had 15 PROs issued, which means that on some of

5 the shipments there was more than one load on a PRO. There

6 were 304,000 pounds of it moved, a total of 12,483 miles, and

7 the revenue for the 18 loads was $22,672.

8 Q Mr. Sinclair, say you had a shipment of 10 loads.

9 Is there any particular requirement that it be on one weigh

10 bill, three weigh bills, five weigh bills? That is just a

11 matter of convenience; isn't it?

12 A The government or the shipper determines that

13 as a matter of convenience. If they are moving 10 loads in on^

14 day and can prepare one bill instead of 10 , we sometimes do

15 that.

16 Q Picking a shipment here at random, 4 -A, from by

17 number Aledjama to Fort McClellan showing 31 PROs and 31 loads,

18 we know whether or not those 31 loads moved at one time during

19 the year or at 12 times during the year or for that matter, on

20 31 separate occasions; is that correct?

21 A Yes.

22 Q So we want more detailed information about the

23 movement of material. If we wanted that sort of information,

24 would your compsmy records have it and if so, in what form

25 would it be main

877

mmms'

A Well, in two forms. In one form in the
detailed manifest that Mr. Nunnally referred to, and number 2
on the weigh bill documentation itself.

Q I see.

Does your company maintain those as company records?

A Yes.

Q That is voluminous material, I am sure.

A Yes.

Q And I entirely understand why you might have
presented us with a summary today, but you do have the other
records available if the committee should have need of them?

A Yes.

Q I very much appreciate your clarifying the nature
of those entries. I think that will avoid some confusion down
the road.

MR. VAN CLEVE: Turning now to — on the index
of materials produced to entry No. 5, Department of Defense
shipments to^^H^B^^^^^^^^^ I ask that this be marked as
Sinclair Exhibit No. 5, please.

This is a computer printout sheet consisting of what
looks like about a dozen pages.

(Whereupon, the document referred to was marked
Sinclair Exhibit No. 5 for identification.)
BY MR. VAN CLEVE:

Q Mr. Sinclair, looking, at. fijfiiibit No. 5, could you

878

mmm

please explain briefly what this document is? And if there
are any headings on the computer sheets that appear to need
some explanation, if you could explain them, i would
appreciate that, for the record.

A The subpoena we received specifically requested
information on moving j^^^^^^^^^^^^^^^^^^^ to Kelly
Air Force Base.

Since we had previously received requests to
produce records on

we included both of those destinations on this
printout' identified as 5, and this is the same three years,
information from our system to those points and in the same
kind of information.

Q So we are clear on that, when you say from our
system, you mean shipments by Baggett Transportation Company;
is that correct?

A Yes.

Q And this in effect is a portion of the
destination manifest that we were reviewing in Exhibit No.
4 — this would be a summary of that?

A It is a further breakdown.

Q Relating to shipments either t

Kelly Air Force Base^^^^^^^^^^^^^H is that

correct?

Correct.

iUii£US£IEiCIU

879

MR. VAN CLEVE: Can we go off the record.

please .

(Discussion off the record.)
MR. VAN CLEVE: Back on the record.
BY MR. VAN CLEVE:
Q Mr. Sinclair, referring again to Sinclair Exhibit
No. 5, I wonder if you might explain in a little more detail
the nature of this document, where the shipments come from,
where the shipments go to.

A Did you want me to do that by page?
Q No, sir, ]ust m general terms. You indicated
previously that these were shipments from anywhere in your
company's system.

A In our system.

Q By any shipper who uses your company to|
Kelly Air Force Base[

is that correct?
A Right.

Looking on the first page here, to further
identify that, you will see Laredo, Texas, to|

llisted on there and on the back page, you might see
Phoenix, Arizona ^^^^H^IJ^H^H ^^^^^^^^ which may
have been government shipments, but was some commodity
forj^^^^^^^^^H
Q I understand, sir, and I appreciate that

liwpuccicirn

880

mmm

1 explanation for the record.

2 There are a couple of entries on this document

3 that I don't believe were on the summary form, and just so

4 that the record is clear, I wonder if you might please explain

5 from the entry SHPCD to the right on the page.

6 A That is the shipper code.

7 Q That is the shipper code, this number, for example,

8 021, looking at what appears to be page 1 of this document,

9 that is the shipper code?

10 A Yes.

11 Q ■ The next column is the weight?

12 A This is an internal figure having to do with our

13 distribution of the money involved in that trip.

14 Q Within the company?

15 A Our employees and our drivers .

16 Q So when this says BTC adjusted. Adj. Rev.,

17 that is Baggett Transportation Company, adjusted revenue?

18 A Yes.

19 Q It doesn't tell us anything about the

20 shipment?

21 A No .

22 Q The lessor amount?

23 A If the load was transported by an independent

24 contractor working for us, this-tS Vhte* cWByjft of compensation

25 from that particuLcur shipment that he received.

ISSSBr

12
13
14
15
16
17

881

;VJ • h"

i!unogiriL

Q And the receiveLble amount? I assume that is the
overall company charge for the shipment?

MR. NUNNALLY: That is what we bill the vendor,
the shipper.

Q And the Baggett revenue should correspond in most
cases with the receiver amount?
A Yes.
° Q Could you explain the circumstances under which
' there would be a difference?

MR. NUNNALLY: This system was devised at a time
when we did inter-line certain freight with other motor
freight carriers.

In this instance, we would be the delivering carrier
or the collecting carrier. We would collect the total line
haul charges and the connecting line would bill us for their
portion of the line haul charges and this would be the only
instance where the delivering carrier would have a receivable

18 list for the revenue

19 MR. VAN CLEVE: Would that always be indicated by

20 an entry under the lessor amount column or is that a separate

21 charge?

22 MR. NUNNALLY: We have not inter-lined freight in

23 several years. This is an old program

24 MR. VAN CLEVE: The question was, in any case, where

25 there is a difference between the receivable amount and the

lltlClilMFD,,,

882

im/^iESi

1 Baggett revenue would there be an entry in the lessor amount

2 column?

3 MR. NUNNALLY: It may or may not. It would still

4 depend on whether or not an independent contractor or a

5 company-owned vehicle addressed our p>ortion of a line haul.

6 BY MR. NUNNALLY:

7 Q But the last three entries basically represent,

8 if I am not mistaken, the internal accounting between Baggett

9 and either its companies from which it leases or inter-line

10 transfers it makes; those are essentially internal accounting

11 entries for the company; is that correct?

12 A That is correct.

13 Q Looking more particularly at this document, it

14 appears that a series of notations have been made on the

15 document.

1g Were those placed there by your company?

17 A No.

ig Q By whom were these notations placed, if you Icnow?

19 A I do not know. They were not there when you

20 received them.

21 Q That helps me; thank you, sir.

22 Referring now to a series of shipments for which

23 you were previously asked to produce documentation by the FBI,

24 would these shipments all be indicated on this Exhibit No. 5?
I believe there were 11 sucl

883

UNtfSsm"

1 A I believe that they are.

2 Q You believe that they are.

3 Do you have a list of those shipments here today?

4 A Yes.

5 Q May I see a copy of that, please?

6 Is that an item on here?

7 A That would be No. 7.

8 Q No. 7 — I see.

9 Could I see at this time, if we have not previously
10 had it produced to us, item No. 7 in your index of materials
H produced?

12 A This is 1984.

13 Q Okay.

14 MR. VAN CLEVE: The witness has now presented for

15 my excimination an additional series of computer sheets and

16 what appear to be the weigh bills.

17 THE WITNESS: The weigh bills. This is a duplicate

18 of the sheets you already have.

19 BY MR. VAN CLEVE:

20 Q The computer sheets are a duplicate of Exhibit 5?

21 A Yes. In addition, I have the weigh bills.

22 Q And these are these objects, there appear to be

23 about 50 of them, which say "U.S. Government freight weigh

24 bill carriers' copy," and they appear to be on Baggett

25 Transportation Company forms.

umimEiL

884

missm

1 Could you ]ust briefly explain what it is you have

2 just handed me, these weigh bill materials?

3 A Yes. That is individual weigh bills covering each

4 shipment contained on the Exhibit 5 sheet.

5 Q Okay.

6 A The documents supporting those entries.

7 Q For the year 1984?

8 A Yes.

9 Q So that if we were to go through these weigh bills,

10 we would then have all of the shipments made by Baggett

11 Transportation Company for the U.S. Government from anywhere

12 the Baggett system to ^^^^^^^^^^^^^^^^^^ for the year-

13 1984?

14 A Correct .

15 MR. SIMPSON: Tom, does the company have 100

16 percent of its weigh bills?

17 Off the record.

18 (Discussion off the record.)

19 MR. VAN CLEVE: Back on the record, please.

20 BY MR. VAN CLEVE:

21 Q If I understood your previous testimony correctly,

22 M^- Sinclair, these weigh bills are the supporting documents

23 that are used to prepare the computer summaries that we

24 have —

25 A Used t2.E5,r£pare the^ manifest Mr. Nunnally referred

885

(uwsm

1 to, the complete numifest from which this summary was gathered

2 Q Thank you.

3 What additional information, looking just at the

4 first weigh bill that you have shown me — what additional

5 information would the committee gain from having the weigh

6 bills that we would not be able to obtain by looking at either

7 the manifest or the summary that you have prepared?

8 A There is much more detailed information on here

9 than is contained on that summary.

10 Q Generally speaking, of what nature is the additional

11 information? For example, there appears to be a general

12 description of the cargo.

13 A That is correct.

14 Q Is there other information that would not appear

15 on the summaries — not matters of detail, but other cate-

16 gories of information?

17 A Yes, the seal numbers, who issued the bill — just

18 all kinds of detailed information that does not appear on the

19 manifest.

20 Q But if we wajit to know — in other words, if we

21 want to know about specific shipments of specific cargo, then

22 we probedjly will need the weigh bills; is that right?

23 A That is correct.

24 Q Okay .

25 On that basis, I think they should perhaps be made

I HMifH ovnUi r^u 1^ ■

886

22
23

imssiffiBi

1 part of the committee's record.

2 MR. VAN CLEVE: Off the record, please.

3 (Discussion off the record. )

4 MR. VAN CLEVE: Back on the record.

5 For purposes of clarifying the record, because of

6 the bulky physical nature of the documents that Mr. Sinclair

7 has just made available to me , I believe Mr. Sinclair wanted

8 to explain more fully exactly what these documents are and

9 then I have a question or two about them.

•)0 THE WITNESS: This is the weigh bill on each ship-

1-) ment listed in Exhibit 5 containing all support documents of

12 record in connection with that weigh bill.

13 BY MR. VAN CLEVE:

14 Q Thank you.

15 And again so that I understand it, for every

1g shipment on Exhibit No. 5, there is a corresponding weigh bill

17 for each of the years 1984 through 1986?

Ig A To the best of our knowledge. We could have made a

ig mistake and developed one or something like that.

20 Q I understand.

21 Do you have a system of reference — I believe we

started to talk about this in connection with -- this is
item No. 7 — correct me if I am wrong — this is item No. 7 in

24 your document production?

That is correct,

iiMrii<;siFo,

887

ornssm^

1 Q Is this just 1984 or iS this all three years?

2 A This is 1984.

3 MR. VAN CLEVE: Could I ask that this be marked as

4 Exhibit 7 for the Sinclair deposition and make this bundle of

5 material that Mr. Sinclair has just handed me Exhibit 7-A,

6 please, for the year 1984-

7 Could I please have the corresponding material for

8 1985, Mr. Sinclair?

9 (Whereupon, the documents referred to were marked

10 Sinclair Deposition Exhibit Nos . 7 and 7-A, respectively,

11 for idehtif ication. )

12 MR. SIMPSON: With respect to that particular

13 exhibit and 1985 and 1986, we do request if necessary access

14 to it or copies, if necessary, and we will let you know if

15 that is becoming necessary.

15 MR. VAN CLEVE: I understand that and can undertake

17 that we will msUce reasonable arrangements either for access or

18 or reproduction of the materials.

19 I understand that this is your company's currently

20 only copy of the document?

21 MR. SIMPSON: We have a copy of the face —
MR. VAN CLEVE: On that basis, I can undertake that

we will make arrangements either for reasonable access under
proper security precautions or for some kind of reproduction.

888

umtfti^Rto^''

1 BY MR. VAN CLEVE:

2 Q I ask you now, Mr. Sinclair, to identify the

3 remaining two piles of weigh bills for me in general terms.

4 A The second group is the weigh bills covering the

5 listing on the manifest for 1985 and the third group of bills
g is covering those shipments listed on the manifest for 1986 .

7 MR. VAN CLEVE: And the smaller of the two groups

8 that Mr. Sinclair has just handed me is the materials for

9 1985. I ask that it be marked Sinclair Exhibit 7-B.

10 (Whereupon, the document referred to was marked

11 Sinclair Deposition Exhibit No. 7-B for identification.)

12 MR. VAN CLEVE: And now' I hand the reporter the last

13 of the group of weigh bills and supporting documents that Mr

14 Sinclair has tendered and ask it be marked Exhibit 7-C,

15 representing the 1986 weigh bills and supporting materials.
1g (Whereupon, the document referred to was marked

17 Sinclair Deposition Exhibit No. 7-C for identification.)

18 MR. VAN CLEVE: Thank you and I appreciate your

19 cooperation with respect to the materials.

20 BY MR. VAN CLEVE:

21 Q On your index of materials produced, item No. 6 is

22 a listing of customer codes to identify shippers in No. 5
O'i above .

24 Do you have a document that corresponds to that

25 entry, Mr. Sinclair?

UAICm^Mfl..

889

gwiyissw

1 A Yes, but you have the only copy in the room with

2 your exhibit picked up yesterday.

3 Q Mr. Sinclair, that may be so, but I can assure you

4 that if I have it, I am not aware of it.

5 (Discussion off the record.)

6 BY MR. VAN CLEVE:

7 Q Mr. Sinclair, you have now tendered to me a document

8 that contains a series of codes and customer codes and a date

9 of 10-1-83.

10 1 ask you to identify this document, Mr. Sinclair.

1-1 Can you- identify it?

12 A Yes. It is a listing of our coded customers

■J3 giving the number of the code covering each company or entity

14 that we do business with and having a code for miscellaneous

15 companies or entities not covered by the specific code.

16 MR. VAN CLEVE: I ask that this be marked as

17 Exhibit 6 for the Sinclair deposition, please.

18 (Whereupon, the document referred to was marked

19 Sinclair Deposition Exhibit No. 6 for identification.)

20 BY MR. VAN CLEVE:

21 Q Mr. Sinclair, looking very briefly at Exhibit No. 6,

22 I note it appears to carry a date of October 1, 1983.

23 Are these codes still current?

24 A Yes. As far as I know. I know of no change.

25 Q So that if one takes Exhibit No. 5, the summary of

iMM£»£l£Ik

890

MiSSIfliB'i'

^^^^Hf^^^^^^^^^^H transportation, and looks the column

2 marked SHPCD. It should correspond to an entry on this code

3 list; is that correct?

4 A That is correct.

5 Q Did you do any shipping for anybody t

6 ^^^^^^^^^^1 during the years 1984 to 1986 for a customer who

7 might be a coded customer and does not appear on this summary?

8 A No , not a coded customer, no. As I told you, any

9 not specifSSftiy-nawed would go into our miscellaneous code.

10 Q Could I ask you to just briefly explain to me item

11 No. 8 in your document submission, which is headed

12 "Reproduction of Submissions to Fincince Center Covering

13 Shipments in 5 above." 4^""

14 Could you explain what that is, what those materials

15 are?

16 A We were requested in the subpoena to produce

17 records to indicate checks or payment — I don't remember the

18 wording exactly — but what this does is indicate the method

19 we use or collection and the payment received for the loads

20 covered by Exhibit No. 5 and the weigh bills supporting it in

21 No . 7 .

22 Q I see.

- - - - — ■*

23 Do you have a document that represents those

24 payments?

25 A Yes.

UNCUSSIFIED

891

mtssm,

1 Q May I examine a copy of that, please? Is this the

2 entire document?

3 MR. VAN CLEVE: Mr. Sinclair has just handed me a

4 two-page document entitled "Public Voucher for Transportation

5 Charges," which appears to originate in the Office of the

6 U.S. Army and is directed to Baggett Transportation Company.

7 I would like to have this marked as Sinclair

8 Exhibit No. 8, please. Correction — apparently this is a set
g of three pages of material.

10 (Whereupon, the document referred to was marked

11 Sinclair Deposition Exhibit No. 8 for identification.)

12 BY MR, VAN CLEVE:

13 Q Mr. Sinclair, is this one document?

14 A Yes.

15 Q It is one document —

1g A Covering specific groups of weigh bills as

17 indicated by the document.

18 Q And how were these specific pages chosen, if you

19 know?

20 A They were chosen because they covered the weigh

21 bills in question or the weigh bills we have been discussing.

22 Q I see.

23 Who asked you to show the payments corresponding

24 to specific weigh bills, if you know?

25 MR. SIMPSON: Was it your interpretation of the

IMASSIBEL,

892

1 subpoena ?

2 THE WITNESS: That is correct.

3 BY MR. VAN CLEVE:

4 Q If you could for the record, describe to me why

5 you chose these specific transactions, what item in the sub-

6 poena caused you to choose these specific transactions?

7 I am not trying to be difficult here. I just

8 want to understand what you did.

9 A I don't remember the exact wording of the subpoena,

10 but it made reference to checks and so on and so forth.

11 Q Right.

12 A We assumed, since the subpoena made reference to it,

13 that they were referring to the shipments they specifically

14 requested to

15 MR. VAN CLEVE: If we could briefly have a look,

16 unless that copy is marked up for internal purposes. I want

17 to make sure we have a clear record. That is what this is

18 all about.

19 MR. SIMPSON: Looking at it, it does say checks and

20 those are ledger sheets and probably this was not specifically

21 called for in the narrow interpretation of the subpoena.

22 MR. VAN CLEVE: I note that Baggett Transportation

23 has offered to supply the committee with documentation that it

24 is counsel's view may not have been required by the subpoena

25 and I would like to note that^s^PQJraciate that

i to note that we apnrac late i

893

12
13
14
15

wieLASSira

BY MR. VAN CLEVE:
Q These specific ledger sheets, though, obviously only
represent a small fraction of Baggett Transportation's con-
tracts with the Federal Government; is that correct?
A That is correct .

MR. VAN CLEVE: Let me stop here and ask that this
^ be marked as Sinclair Exhibit No. 8, please.
^ (Whereupon, the document referred to was marked

^ Sinclair Deposition Exhibit No. 8 for identification.)
10 MR. VAN CLEVE: Back on the record.

We have a document of three separate and
apparently unrelated pages marked as Sinclair Exhibit No. 8,
and I am now going to show this docxoment to Mr. Nunnally and
ask him first to generally explain the document, what kind of
a document is this, and then to explain some highlighting that
"•6 appears on the document, again in gemeral terms, without going
1^ through each specific transaction.
18 MR, NUNNALLY: This is a reproduction of a motor

"•9 freight carrier submission to the Government Finance Center

20 for payment of transportation charges.

21 We have highlighted several items on this, which

22 represents the Baggett Transportation Company PRO number,

23 and the government bill of lading number, and the amount of

24 line haul charges.

25 We were previously questioned by the FBI on a

894

y(ieiii.^H(t^T

1 specific movement, and this is — to^^^^^^^^^^^^ and this is

2 the payment of our line haul charges for that movement.

3 MR. VAN CLEVE: When you say a specific movement —

4 thank you for that explanation — when you say a specific

5 movement, do you mean one shipment of freight or a series of

6 shipments of freight that were connected in some way?

7 MR. NUNNALLY: They are a series of shipments

8 moving within a given time frame.

9 MR. VAN CLEVE: What was that time frame, if you

10 know?

11 MR. NUNNALLY: I would have to check back, but

12 since they are all on the same submission, it is indicative-

13 that they all moved within a given time frame.

14 MR. VAN CLEVE: And would these transfers be

15 shown on Sinclair Exhibit No. 5?

16 MR. NUNNALLY: For calendar year 1986, yes, sir.

17 MR. VAN CLEVE: Exhibit 5 covers only 1986 —

18 THE WITNESS: Four, five and six.

19 MR. VAN CLEVE: Exhibit No. 5 covers calendar

20 years 1984, 1985 and 1986, so all the highlighted transactions

21 should show up on Exhibit 5?

22 MR. NUNNALLY: Yes, sir.

23 MR. VAN CLEVE: If I understand correctly what

24 that should mean is that all — we should be able to trace the

25 payments to Baggett for freight movements that may be of

895

Mimiffi^

1 particular interest to the committee by looking between

2 Exhibit No. 5 and the document that you have just described

3 and identified. -..

4 MR. NUNNALLY: That is where we received payment

5 for the movement.

6 MR. VAN CLEVEt Would there be any freight that

7 Baggett Transportation would move at the request of the United

8 States Government that would not be shown in Exhibit No. 5 —
^^m^^^^^^^l^^^^^H Is a complete

10 freight requested by the United states Government or any enti

11 ty of the government?

12 MR. NUNNALLY: Exhibit 5 would embrace a shipment

13 from the Baggett system to

14 MR. VAN CLEVE: It would include a shipment at the

15 request of any entity of the United States Government?

16 MR. NUNNALLY: That is true.

17 MR. VAN CLEVE: Thank you.

18 Do you want to clarify your last statement?

19 MR. NUNNALLY: I said from the system.

20 MR. VAN CLEVE: Item No. 9 on the index of materials

21 produced is a schedule of tariffs and tenders covering ship

22 ments in No. 5 above.

23 Could you briefly explain what that is, Mr.

24 Sinclair?

25 THE WITNESS: We are required to produce the

IMliS^IElEII

896

Mmsm

' account of the United States Government either tariffs or

tenders reflecting our charges for our particular service.

and to be consistent in what we have interpreted this subpoena

to say, we have included our publications and offers to the
government which moved the same shipments you and Mr. Nunnally
° have just been discussing.
BY MR. VAN CLEVE
Q I see.

^ A Which is the authority for the making of our charge
''' for that service, and where our rate that appears on the mani
11

fest recap and the freight bill Ccime from.

MR. VAN CLEVE: Could we have this marked Exhibit
No. 9, please.

(Whereupon, the document referred to was marked
Sinclair Deposition Exhibit No. 9 for identification.)
16 MR. VAN CLEVE: I have no questions on Exhibit

"•7 No . 9

18 MR. SIMPSON: Counsel, it was just called to my

19 attention that the heading on our Sinclair Exhibit 1 on

20 Exhibit 5 states, "Department of Defense shipments to

21 ^^^^^^^^^^HB| and I think Mr. Sinclair testified that

22 includes not only the Department of Defense, but all shipments

23 including those of — for instance, I just saw one from

24 Thiokol Chemical, not only the Department of Defense

25 MR. VAN CLEVE: We appreciate that clarification

UNilASSieEDL

897

1 Item 10 on the list of materials produced is headed drivers

2 logs.

3 BY MR. VAN CLEVE:

4 0 Could you explain what that entry represents, Mr.

5 Sinclair?

6 A Still in the same vein of what the FBI asked for

7 and our interpretation of the subpoena, it would have indicate

8 that there was an interest in the route of travel.

9 So we brought some of the logs covering some of

10 the same shipments that we have previously been discussing.

11 Q And could you explain why you brought some of the

12 logs covering some of the shipments?

13 A We brought the logs still in our possession

14 covering the shipments moving in 1986 and pointed up to us

15 by the FBI.

16 The reason we only have logs for some is that we are

17 only required to retain driver logs for a period of six

18 months, so we can give you only those within the past six

19 months.

20 Q Thank you for that explanation.

21 MR. VAN CLEVE: Could we have this set of logs

22 headed "Driver's Daily Log," and running something on the

23 order of half a dozen pages — counsel, would you like to

24 examine it?

25 MR. SIMPSON: Let me examine it.

UlU)UU£::;:a-

898

MitSteftKI^'

' (Document proffered.)

2 MR. VAN CLEVE: Let me have this marked, please,

3 as Sinclair Exhibit 10.

^ (Whereupon, the document referred to was marked

5 Sinclair Deposition Exhibit No. 10 for identification.)

6 BY MR. VAN CLEVE:

7 Q For purposes of the record, Mr. Sinclair, can you

8 identify these documents, please?

9 These are company records, aren't they, and who

10 prepares them and how are they maintained?

11 A This is a driver's daily^log which is prepared

12 by each driver for each calendar day during his total employ-

13 ment as a driver.

14 Q And what sort of information does it provide for

15 the company?

16 A It indicates the origin and destination of the logs

17 on a daily basis indicating the periods of time that the

18 driver was on duty, not driving, driving or in a sleeper berth

19 the points that he made stops in the course of that 2 4 -hour

20 period, the number of miles he traveled and the total time

21 he was on duty during that day.

22 Q Thank you.

23 Let me just take a look here . Just a couple of

24 questions, Mr. Sinclair, for purposes of the record.

25 I notice that down below on what appears to be sort

899

•mmm

1 of a time chart there are a series of entries that are hand-

2 written by the drivers.

3 Are they required to make entries at particular

4 points? Are these off-loading and on-loading points or how

5 are the specific times chosen?

6 A They are required to make an entry at each duty

7 change, status change.

8 Q What is a duty change /or a status change?

9 A Going from driving to stopping at a truck stop,

10 when he goes from driving to on duty not driving, any time

11 his duty status changes, he is supposed to indicate the point

12 of change.

13 Q Would that include stopping for a cup of coffee

14 at a truck stop?

15 A If it was over five minutes.

16 Q And does the company expect its drivers to be

17 pretty careful about filling out these records?

18 A Yes.

19 Q And, therefore, with respect to these specific

20 records, it should be possible to trace the precise route of

21 a truck for that particular shipment by looking at these

22 entries?

23 A Yes. That was our purpose in including that.

24 Q I notice that on a number of occasions, just to

25 choose an example here, there is a driver's daily log for

900

Mmnw'

1 November 4, 1986, Doris and David Humphries were the driver

2 and co-driver, and it appears from the handwritten entries

3 here that they reached^^^^^^^^^^^^^^^B at about 1:00

4 o'clock in the afternoon and later that day, there is an entry

5 saying unloading, later that day the truck went t
^^^^|B and to

7 Why would the truck continue to ot he r^^^^| points

8 after having made a dropoff in

9 A It would be coming back or he would subsequently

10 be dispatched to another destination.

11 Q It could happen either way?

12 A Yes.

13 Q There is no way to tell from these sheets, really?

14 A No. The reason I asked you to let me look at it,

15 sometimes the driver will indicate empty and loaded.

16 Q Is there anything else that you would like to tell

17 the committee cQ)Out the kind of information that could be

18 obtained from these drivers' daily logs?

19 A That is cibout it, his activity for that day.

20 Q Okay .

21 Is this report filed simply with the company or

22 with any other agency?

23 A It is filed with the compemy and required to be

24 maintained for six months for the purpose of controlling a

25 driver's duty hours and driving time as regulated by the

901

mmm'

Department of Transportation.

Q I see, and that is essentially a safety regulation,
is it not, sir?
A Yes.
Q Thank you.

Item No. 11 on Sinclair Exhibit No. 1, the
index of materials produced, is the driver's trip reports and
did you bring some documents responsive to that with you
today, sir?

A Yes, the same shipments we have been talking about
all the time, we pulled some of the trip reports because there
again they appeared to be interested in the route of traffic.
Q I appreciate that.

MR. VAN CLEVE: Could we have this marked as
Sinclair Exhibit No. 11, please.

(Whereupon, the document referred to was marked
Sinclair Deposition Exhibit No. 11 for identification.)
BY MR. VAN CLEVE:
"•9 Q What information can be obtained from these

20 driver's trip reports, Mr. Sinclair, if you know, that would

21 not be obtainable from the driver's daily log; what sorts of
things, just in general terms?

23 A The specific highway route of travel, the miles he

24 traveled on that highway in each state, and the fuel he

25 purchased by state and by the number of gallons.

ii&icu&GiCiro^

902

mmm

Q I notice that there has been some highlighting
done on the documents.

Was that done by your company, sir?
A I don't know.

Q Do any of the witnesses here today know? So we
don't know if the highlighting was done by your company before
production?

A I would assume so because in each case it highlights
[trip, which we had them looking for.
MR. SIMPSON: We expect so, but these two people
didn't do it, but we do know that they are the destinations,
on each is highlighted and it appears to be in

MR. VAN CLEVE: Okay.
Let's go off the record for a minute.
(Discussion off the record. )
MR. VAN CLEVE: Back on the record.
BY MR. VAN CLEVE:
Q Mr. Sinclair, you mentioned previously that the FBI
had been in touch with Baggett TreUisportation in connection
with certain shipments that had occurred, I gather, prin-
cipally during 1986 or all during 19^^if *^9e*Know?
A All during 1986.

Q I see , and did the FBI indicate to you what the
nature of those shipments might have been in terms of the

903

2
3

19
20
21
22
23
24

ONSIil^l»EDL

type of material or anything else about them, just in general
terms?

A No.

Q Independent of that, do you personally have any
knowledge about the shipments that the FBI expressed an inter-
est in?

A No.

Q When those shipments were made, were they arranged
through the normal channels for which material of that type
might be shipped, in other words, if it was Army material and
they wanted it moved from Red Stone arsenal to somewhere in

I was that to your knowledge handled in a

normal manner?

A As far as I know, it was. That could be
established again maybe by referring to the documentation.

Q But there didn't come a time when someone came to
you and said, "We have a special shipment we would like to

"IS make from Red Stone tol

A No.

Q So before November 1986, there again to be press
disclosures with the fact that the United states had apparent-
ly shipped various forms of weapons to Irem, did you have
knowledge of that?

A No.

25 Q I take it- V^'y^e.skioments had been handled through

(imMifli;

904

vmmm

^'^ 48

1 normal channels there would not have been any basis using

2 your company's records for you to have any knowledge of that?

3 A There would not.

4 Q For completeness purposes, if you wouldn't mind,

5 I have a couple of sort of unrelated questions that I want to

6 ask you. Please understand it is simply to have a complete

7 record.

8 with respect to each of these individuals, I would

9 like you to tell me if you have ever met or spoken to this
10 person.
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Oliver North?

No.

John Poindexter?

No.

Robert McFarlane

No.

Michael Ledeen?

No.

Richard Secord?

No.

Thomas Clines?

No.

Albert Hakim?

No.

Richard Gadd?

IIMJlSSIfltlL,

905

wstmm

A No.

Q Robert Dutton?

A No.

^ Q William Langton?

5 A No,

6 Q Robert Mason?

A No.

8 Q Very briefly, Mr. Sinclair, with respect to the

^ subpoena, I am not going to read the whole thing to you, but

^^ this is a subpoena to Baggett Transportation Company,

^^ Incorporated, and it asks you to produce all materials rela-^_:d

^2 to the company's transportation of weapons or supplies arrange^

by the United States Department of Defense, the CIA, NSC

"''* staff, Stanford Technology Trading Associates, Inc., Albert

"IS Hakim, or Richard Secord or their agents or employees
16 I take it you have done that , you have produced

"•7 all materials that your company has that is connected in any

18 way with the transportation of weapons or supplies for any of

19 those persons; is that correct?

20 A Yes.

21 MR. SIMPSON: I would have to say that as far as we

22 know, there are none. We have complied with the subpoena,

23 but we haven't produced anything that meets what you have just

24 read.

25 We don't know of any transportation that was

906

mmm

il' 50

1 arranged by, is that the terminology?

2 MR. VAN CLEVE: Yes, arranged by the Department of

3 Defense.

4 MR. SIMPSON: I am sorry. We have two different

5 subpoenas.

6 MR. VAN CLEVE: I am sorry. I am looking at what

7 I thought was the correct subpoena.

8 MR. SIMPSON: The one I was reading from didn't

9 mention the Department of Defense.

10 MR. VAN CLEVE: Okay.

11 THE WITNESS: One was to produce records and the

12 other —

13 MR. VAN CLEVE: I understand. One is for Mr.

14 Sinclair's appearance on behalf of the compciny and the other

15 is a subpoena with respect to company records. But again just

16 for purposes of completeness, you have produced all materials

17 relating to the company's transportation of weapons or

18 supplies arranged by the Department of Defense; is that

19 correct?

20 THE WITNESS: Yes.

21 BY MR. VAN CLEVE:

22 Q By the CIA; is that correct?

23 A We have reproduced all of the records shown in

24 this index of materials produced covering those items

25 previously discussed when we entered those —

907

mmm'

1 Q I understand, but that was not my question. I need

2 to ask you the question in this way: Have you produced for us

3 all materials relating to the company's transportation of

4 weapons or supplies on behalf of the Central Intelligence

5 Agency?

6 A As far as we know.

7 Q The same answer with respect to the National

8 Security Council?

9 A Yes.

10 Q Or any of its employees or consultants?

11 A Yes.

12 Q I take it since you say you have never met any of

13 these individuals, Albert Hakim, Richard Secord, or their

14 agents or employees, all transportation of weapons or supplies

15 to Kelly Air Force Base?

16 A Yes.

17 Q From the period January 1st, 1984, to December 15,

18 1986?

19 A That is correct.

20 MR. VAN CLEVE: We appreciate that and we

21 appreciate your appearance before us this morning, and with

22 that, unless your counsel has ciny statement he would like to

23 make for the record, I think we can adjourn the deposition.

24 MR. SIMPSON: No statement. We have discussed

25 access to the records for production.

IIMPI ACCJOf [L,

908

mmm

1 MR. VAN CLEVE: We have and I might also indicate

2 to you, Mr. Sinclair, that it may be necessary, based on the

3 examination of the several hundred pages of documents which I

4 personally have seen for the first time this morning, it may

5 be that there will be some additional questions that we would

6 need to ask of you or someone from your company, and so I want

7 you to be aware of that possibility.

8 With that, I think we can conclude the deposition

9 for today.

10 (Whereupon, at 12:30 p.m., the deposition

11 concluded.)
12
13
14
15
16
17
18
19
20
21
22
23
24

25 _.

:.o .^ ...of.Aq

909

Dotson/drg

1
2

4
5
6

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

UIWSfffflF

ennv >.» / «- ^ rfTin

//^/:5-

DEPOSITION OF JOHN K. SINGLAUB

Wednesday, April 29, 1987

U.S. House of Representatives,

Select Committee to Investigate Covert

Arms Transactions with Iran,
Washington, D.C.

The committee met, pursuant to call, at 9:00 a.m., in
Room H-139, the Capital, Kenneth M. Ballen (Staff Counsel of
House Select Committee) presiding.

Present: Kenneth M. Ballen, Staff Counsel; Robert K.
Kelley, Counsel for John K. Singlaub; and Charles Kerr,
Associate Counsel, United States Senate Select Committee on

Secret Military Assistance to Iran.

Partially Declassified/Released on (~'{?>- \
under provisions of E.O. 12356
by N. Menan, National Security Council

43i|^

3^^i

910

nmwsF

Whereupon,

JOHN K. SINGLAUB,
was called as a witness by Counsel for the Select Committee,
having been first duly sworn, was examined and testified as
follows:

EXAMINATION BY COUNSEL FOR THE SELECT COMMITTEE
BY MR. BALLEN:

Q How long did you serve in the Armed Forces of the
United States?

A A little over 35 years on active duty.

Q What, in general, were the areas that you served
in functionally? Did you serve in intelligence work?

A Yes, I have had some intelligence assignments.
Most of my assignments have been operational. In World War
II, I served with OSS, volunteered out of a parachute
regiment serving OSS and worked with the French Resistance
in Europe, and before the war was over, I went out and worked
with the Chinese in resistance against the Japanese. I had
an intelligence assignment ^^^^^^^^^^^after World War II
for cUDOut three years. I then went back into operational
areas.

During the Korean War, I had two tours, one tour
w a s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^k r u n n 1 n g
the covert and clandestine operations^^^^^^^^^^^^^^H. My
second tour I was an infantry battalion commander. I went

Ui^miU

911

UUffliiWSf'

'' through the regular school system of the Army, and in the

2 Vietnam War, I was head of the joint conventional task force

3 called MAC SOG, standing for Studies and Observation Group.
* Q Since retiring from active duty, could you tell us

5 about when you became associated with the World Anticommunist

6 League and your role with them?

7 A I had not heard of the World Anticommunist League

8 until 1980, when I was asked to come to Australia, to Perth,

9 Australia, to speak to a meeting of the Asian People's Anti-

10 communist League, which is one of the regions of the World

11 Anticommunist League. I did speak to that group the end of

12 November, 1980.

13 The following year, I was invited to attend a

14 meeting of the World Anticommunist League.

15 Q What position do you hold with United States Council

16 for World Freedom?

17 A I am the chairman for the United States Council for

18 World Freedom. For two years, from September, 1984, to

19 September, 19 86, I was chairman of the World Anticommunist

20 as well as chairman of the U.S. Council.

21 Q In May, 1984, General, did you receive a request

22 from Fred Ickle, Under Secretary of Defense?

23 A Yes, I did.

24 Q What was the request

25 A To ask me to head a panel to examine the

912

UNeUMikT

countersurgency program in El Salvador.

Q What were the panel's recommendations after that
period of study?

A Generally the recommendations were tol

Q Do you know Felix Rodriguez?

A Yes. I have met him on several occasions.

Q Where did you meet him?

A In El Salvador. He explained to me on one meeting

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that we had met previously, but he didn't tell me where that
was, and I don't remember where that was.

Q What conversations did you have with him when you
met him in El Salvador?

A Well, very limited conversations. He attended a
meeting that I had requested!

Q What was the discussions that you had at this meet-

ing?

Q When did you have this conversation?

A I am going to refer to my chronology here.

I believe that was in the end of March of 1986.
BY MR. KERR:

Q Your traveling companion at that time was Barbara
Studley?

A Yes.

Q Was El Salvador the only country you visited?

A I visited Costa Rica immediately preceding that,
and before that, Tegucigalpa in Honduras.

IINfiBSMH^

914

BY MR. BALLEN:
Q In January, 1985, you traveled to|

A Yes.

Q Were you ir

A Yes.

Q At that time, did you present to'
proposal from Geomilitech Consultants Corporation to sell
MK-37 torpedoes

A No. I think, if I stated that on an earlier visit,
I had -- not having had a chance to look at my past records or
visit any other notes, I visited^^^^»twice that year, once
in January and again in July

Q Before we get to the July visit, let me ask you
about the January visit. Did you discuss with
on that visit!

A I have to say that I ajn not certain whether I
spoke to^^^^^^^^lon that subject at that time. I am not
certain that I spoke to^^^^^Hthat visit on that subject.
I did discuss that subject with him on some of my visits.

Q Did you have any discussions with]

on that visit in January on the contribution

WSSJFi^

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hWS!«8^

make to the Contra cause?

A Yes, I did. It IS my recollection that I did on
that trip. I have to say that I have made so many trips
there that I am really not firm in my mind on which ones
that I brought up this subject, but it was my recollection
now that it was on the January trip that I first mentioned
this subject to

Q Did you request of him a specific amount of money
for the Contra cause?

A It was — I told him we needed $10 million and
that I hoped to get at least five from his government, and I
was going to ask another government for five million.

Q Had you informed Oliver North prior to this trip
you had?

A No, I did not mention it to him prior to going, to
my recollection, but I definitely did brief him afterwards.

Q You had met Oliver North and had dealt with him
prior to January, 1985, is that correct?

A Oh, yes.

Q Now, did you present to
three options in which he would make the contribution to the
Contra cause?

A Yes.

Q Did you tell him that he could make a direct deposit
into a Contra bank account

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A Right, that was one option.

Q Did you tell him that you could open an account
for the monies that way?

A No. I said I would be willing to receive, meet
his representative any place m the world, the free world,
and receive whatever instrument and then deposit that and
under that option I would be willing to give him an accounting
of exactly how that money was spent. That WaS an advantage
over the first option, where he would deposit it.

Q That would be the second option you presented to
him?

Q The third option, did you present tha

^^^^^^^^ the excess could be
applied for the Contras?

A I don't believe that I mentioned^H^^^^^^Bat the
first meeting with him, because I really wasn't aware of that

And I at the time said one of the ways in which you
could make this contribution would be to allow me to approach
a vendor and see if they would be willing to share the profit
with the Contras. And in this case, you would simply have a
single payment from your budget with the commission being

bnaOTnRirT

917

split.

Q And you had no particular transaction in mind when
you --

A Not at that time, no. I did not have it in mind,
but I did -- I had been approached by

Iwhen I s-j.d, "Is there anything
that I can do to try to help you in the United States?"
And they had both sa:

Q Did you discuss with^^^^^^^^^^B'^^'^^'^9 that visit
that you could arrange for a signal to be sent to them from
the United States Government to assure them this would not
conflict with U.S. Government desires?

A Yes, I did. I said that if they had a need to
determine that I was not acting totally independent of U.S.
policy, I thought I could arrange some kind of a signal to
be given by someone in the administration to indicate that
it was, in fact, the policy of this administration to support
the Contra cause.

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1 Q And did you also state that it is your understanding

2 the adminiSTration would be pleased if.

^^^^^^^^^^^^J ma d e

3 this contribution?

4 A Yes. I referred to several of President Reagan's

5 speeches in which he had compared the support to the Contras

6 to support received by our revolur.ists from France and Holland

7 and Spam, and that in view of the fact the President was

8 anxious to do this, I was confident that he would be pleased

9 if they made a contribution of this type.

10 Q What authority. General, did you have to tell^^H

11 ^H^^^^Hyou could arrange for a signal from the administra-

12 tion?

13 A I had no authority. I have to say that I acted on

14 my own, based upon my previous contacts with Oliver North,

15 which indicated he was operating with the blessing of the
15 administration, and I felt that through him I could arrange
17 this type of signal.
■J8 I knew that there were others in the government

19 who were sympathetic to these efforts. It was, after all,

20 the administration's policy, as expressed not only in the

21 public speeches of the President, but in the appeals to the

22 Congress, to provide aid that had been turned down. While

23 I admitted this was a defiance of the congressional edict,

24 it was still the administration's policy to provide help to

25 the Contras

919

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1
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Q And what had Oliver North specifically told you
prior to^^^^^^^^^^^^^^^|in January that led you to believe
that he would be willing to send a signal t

A I don't think he told me anything.

Q Didn't you ]ust tell us that you were confident,
from your conversations witu him, that a signal could be
sent?

A Well, I was confident that it is the policy of the
administration to support the Contras and that what he was
doing in this regard had the blessing of the President.

Q And what, to your knowledge, at that point in time,
was he doing in this regard?

A He was -- from my point of view, he was the
recipient of getting information that I had and was passing
it on to his superiors about the work that I was doing to
support Adolfo Calero and the other members of the Nicaraguan
Democratic Resistance.

Q General, let me ask you this question: In October,
1984, you were aware of the fact that the Congress of the
United States voted a cut-off in U.S. aid to the Contras.

A Right.

Q After that time — now you are

Lto make a contribution and stating
that you could get a signal from the United States Government
that this would not conflict with administration policy. You

UNtUSffil

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UNOHSSIFtE&ET

just stated that you had some contact with Oliver North,
and the question I have for you is: By making that statement,
did you not put the credibility of the U.S. Government on the
line in

A I don't know what you mean by that.

Q You told^^^^^^^^^^^fthat you could arrange for a
signal to be sent from the United States Government, that
they would not oppose or they would approve your request to
solicit aid?

A Right. I wanted to do that in the event that they
required it so as to indicate I was not acting as a con artist
trying to get money out of them for some elicit purpose.

Q That is just my question. General. Where was your
authority to represent to

A I didn't have any authority, I was acting on my own,
because of my very close personal long-term relationships
with the individuals involved. Some- of these go back more
than 30 years.

Q I understand that, General.

A Yes.

Q What I don't understand, I guess, is this, you had
said to them that you could arrange for a signal to be sent
from the United States Government. How did you know that
you could do that?

I didn't.

•Iroi^flKlfi!^

921

iliiASSfFi§T

MR. KELLEY: I think he has answered that.
I MR. BALLEN: I will move on.

MR. KELLEY: He did answer that.

MR. KERR: He certa"inly did not answer the question,

MR. KELLEY: Do you want to go back? We want to
answer it.

THE WITNESS: I want to be as open as possible.

MR. KELLEY: You did answer it. Say what you said.

THE WITNESS: In the' course of the conversation, I
was concerned when they, asked questions about the Congres is
against this, we have worry about what the Congress thinks
because we depend upon the good will of the Congress. I
said, that is true, but I assure you that it is the adminis-
tration's policy to provide help to the Contras. And they
also raised the other concern about their fear of public
knowledge of this would cause them to have problems with

MR. KERR: We understand what motivate
to ask you for that kind of information. What we don't
understand is what caused you to believe that you had the
capability of having a signal sent to them. Why did you think
that you could send a signal, the U.S. Government would send
a signal for you tol

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922

BNRSSSffffiBr

THE WITNESS: Let me make sure you understand. No
one told me to make that trip. No one asked me to do this
and that they would give a signal.

MR. KERR: Why did you think nonetheless they would
send a signal?

THE V'lTNESS: Because the President is so clearly
interested in helping the Nicaraguan Freedom Fighters.

MR. KERR: This was merely a matter of inference
or suntiise?

THE WITNESS: That is right. I didn't know how this
idea would be received when I got back. It occurred to me
when I was there and had this opportunity to raise this issue,
I had been concerned about how to raise money, and it occurred
when X was there that maybe this is a place -- I learned,
for example, they had at that time something like

I have given personal recommendations to
that government about how to better their relations with our
government.

BY MR. BALLEN:
Q Let me ask you a specific question in this regard,
which is the following: You knew, you were drawing an
inferrence that the administration supported the Contras.
The important fact, though, which you raised with the

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1 is that congress passed a law in the interim, in October of

2 1984. What led you to believe that the administration still,

3 after the Boland Amendment was passed, was interested in you
* or in any way soliciting funds?

5 MR. KELLEY: I want the General to answer it, but

6 I want to point out, and I am not being combative, I want to

7 b- helpful, I think he said two or three times the President

8 of the united States was making speeches and indicating that

9 he was supporting aid to the Contras.
But you answer it on your own. I think he said

11 that two or three times.

12 MR. BALLEN: There is a big difference between
saying support of the Contras and saying that the United States
Government, after this law was passed, was willing to have

15 you go and solicit funds from third countries.

16 THE WITNESS: Well, I explained to them that I was
not a representative of the United States Government, that I
was.acting as a private citizen, and I knew the attitude of
our President, which had been made clear, and that I thought
this was an opportunity where they could be helpful in the
anticommunist cause, where they could be helpful in terms of
doing something that would have the approval of the President
without irritating the Congress. I recognized that there
was this dichotomy of interest here.

But they knew my position with respect to the

924

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administration, that I was not a member of the administration,
that I was a retired officer and a friend ofl

MR. FEIN: Could I ask ]ust two clarifying points.
I don't want to interrupt, but I am trying to clarify in my
own mind -- I won't unless you --

MR. BALLEN: I don't mind.

THE WITNESS: Let me say I had great anxiety after
I initiated this conversation that I might not be able to
get a signal or they might think it was a lousy idea back
here in Washington. But if I could get them to say yes, if
we are assured that this isn't going to irritate your
government, I figured there was some way we could get that
signal back to them through their ambassador here, I

or in some other way
that they wanted to make sure that I was not acting without
some kind of blessing from the White House.

BY MR. BALLEN:
Q Let me ask you this -- did you want to ask some-
thing?

MR. FEIN: In your own mind, when you spoke with

did you make any distinction between what might
be called humanitarian assistance that might be the product
of whatever they paid, as opposed to military or paramilitary
assistance?

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THE WITNESS: Well, I explained that I was actively
involved in raising humanitarian assistance through the U.S.
Council's efforts in the states, but that in order to buy the
weapons systems they needed to defend themselves, they eeded
to have money deposited in a foreign account from which they
could buy on the international arms market.

And in my discussions, I said that I would also
accept contributions of arms in kind if that was easier for
them to do.

BY MR. BALLEN:
Q Were you aware prior to October, 1984, of meeting

^with North, Adolfo Calero, and Hunt, officials

No, I don't think I was aware of it. I have
subsequently been informed that meetings had taken place,
because I was told in one of my meetings when I met with

Q He told you that?

A No, Adolfo Calero did.

Q When did Adolfo Calero tell you that?

A I believe that was in March of 1985.

Q under what circumstances did he tell you about that

A Well, I was with Adolfo Calero]

imSSIEKitr

926

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Q That was in March of 1985?
A Yes.

Q Now, General, you arranged a shipment of $5.3
million worth of arms to the Contras, is that not correct?
A That is correct, yes.
Q Were you aware that that shipment was addressed to

A Yes.

Q Did he subsequently deliver that shipment to the
Contras or keep it in his control?

He delivered it to the Contras, as it was needed.

How long did he

1 can't answer that.

How do you know he delivered it to the Contras?

Well, because I saw some of the weapons in the
hands of the Contras, and on later visits and conversations,
the head of the military said how delighted he was with the
quality of the weapons and so forth.
Q When was that?

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■ A I think that was on the August visit of 1985. It
may have been on a subsequent one, but I do know they did
get them and that they were pleased with the high <^ity.
Q When you say they got them, they got all the

weapons?

A NO, I can't verify they got all of the weapons. No,

I can't verify that. But I do know they --

Q But in August, 1985, they were using them at the

time?

Yes.

I apologize for jumping back and forth. Onj^our

did

trip

you present three options

MR. KERB: This would be

MR. BALLEN: ^^^^^H X ^ ^orry
THE WITNESS: I am not sure whether or not I
presented three options for payment, because at that time I
did not know of any weapons systems or other things being
purchased by^^^^ron^rican
Most of the aTquisitioI^lKl'as through government-to-

government negotiations.

I did, however, say that they could make an in-kind
contribution because they had a lot of weapon systems that
we would like to have had that they are making there, plus
this same first jwo options either deposit directly m

928

UWDSSflfl'^

1
2

bank efccount, or I would meet their representative
any place, take their instrument, deposit it and be able to
give them an accounting.
BY MR. BALLEN:
Q Who did you talk w:

A I spoke toj

No, not at that time.

Q When you returned to Washington after your trips,

you told us earlier you briefed Oliver North at the White
House.

A That is right.

Q When would that be, sir?

A It is possible I briefed him at Rancho Mirage on
that trip, because that trip -- let me just check some other
papers. Okay. 0(^_may have been on the 8th or 9th -- 8th of
February. I came to Washington on that date, but I saw Oliver
North on the 22nd, 23rd of February, 1985. I came back

land went almost inunediately to Miami. Of course, the
meeting over the weekend was the first weekend in February,
and I came to Washington, D.C. on the 8th or 9th, or 7th.

T'W'sTOmKT

929

mRPHF

6
7
8
9

Q Did you brief Colonel North at that time?

A It was my policy to brief him as soon as I returned.

I had these other meetings right after I returned, so I would
usually schedule a visit to Washington if I had something
to pass on to him.

Q And did you --

A But, you know, in this case, I am not certain. I
aon-t have any records that would indicate I saw Oliver North
at that time. And I may have delayed it knowing that I was
going to see him later in the month at Rancho Mirage.
BY MR. KERR:
When did you return to the United States?

On the 30th.

Of January?

Of January, yes.

YOU don-t have a record of meeting with Colonel

North on the 5th of February, 1986?
A Let me check.

No. My records show I was in Florida.
Q Vou don- t remember a meeting with colonel North in

Florida, is that right?
A No, I don't.

BY MR. BALLEN:
Q in February, when you met with Colonel North, wl^

did you tell him about the ^rip^to

JP/tl

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A I told him tKvhiie, that I had made this overa"-^
and that while they at^terested in providing help, they had
some anxieties. I expbted what those were, about not
wanting to irritate the!ngress or that it had to be done
in a way that would not '"public , and I explained that these
options for making the glents were offered, or contributions
in kind, if that was preTa'^ble, and that they were to let me
know if they wanted me t^y to arrange for some kind of a
signal. And he indicated; thought that that could be
arranged.

In other words ,''*mebody from -- that was known to

from the White House, couldjo and meet wi

and just acknowledge the fai^'^that they knew that I had made
the trip and that I had appPached their officials. I thought
that that would be an adequae indication that I was not
operating independent of theWhite House.

Q Colonel North said le would be willing to provide -
A Yes. But he said In would have to check it out
with his boss and that he had somebody in mind that could do
that that was recognized as a spokesman for the White House
in those areas.

Q Did he specify who .lis boss was he was going to
check It out with?

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A I am not sure whether he indicated. . It was my
assumption that it was Bud McFarlane.

Q Did at that time he talk to you about the Nicaraguan
war ship approaching North Korean waters?

A I don't remember. I can't place that m the time
spectrum. He did at one time brief me on that.

Q And what did he say on that?

A He said that there was a ship that either had or
was to acquire a load of weapo

Q Did Colonel North ask you to discuss this with
anyone

A I believe I told him that I was qoinq to have a
meeting with

Q Did you report to Oliver North on what

mmm

932

CXD

A Yes.

Q What did you tell Oliver North^^^^^^Htold you?

A That he would pass on this information to his
superiors

Q Did Colonel North tell you the supplies on this ship
were coming from Iran arms?

A My recollection is not complete on that. It does
occur to me that he said they were North Korean arms that
were sent someplace, rejected, and the ship had returned.

Q Were the arms destined for Nicaragua? Did he tell
you that?

A The intention was if the ship could be scuttled and
seized that —

(Discussion off the record.)

THE WITNESS: If your question was did Oliver North
say the ship was en route to Nicaragua —
MR. BALLEN: Yes.

THE WITNESS: I don't remember that. I remember
it was the intent of this operation, if it were to take place,
to have the weapons made available to the Nicaraguan Freedom
Fighters as opposed to the Nicaraguan Government. I believe,
I say my memory is hazy on this, and I made no notes. I
believe that they were destined for Nicaragua, and the object
was to prevent them from being delivered to the Sandinistas
and take control of them so they could be delivered to the

933

Nicaraguan Freedom Fighters.
BY MR. BALLEN:
Q Did you tell Colonel North at this time that the

[was willing to help the Nicaraguan Resistanc

in other ways?

A Yes, I believe that I did, that I had the impression
that they were anxious to be helpful to the Nicaraguan Freedom
Fighters.

Q And that impression occurred as a result of your
trip you had ]ust completed?

A Trips, right. I had several trips.
Q Let me focus specifically on your trip of January
[in 1985. Did that impression you formed occur as
the result of that trip?
Yes.

And did you report that to Lieutenant Colonel

Q
North?

A Right. Yes.

Q And did you report that in the context of asking
him to send a signal to|

A Yes.

Q Did Lieutenant Colonel North ask you to approach
Adolfo Calero with reference to the ship that we have been
discussing that was entering South Korean waters, passing
by those waters?

TO'

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A I don't remember. I don't remember.

Q Did you have any further discussions with North
after — after you informed him of^^^^^^^^^^^^Bwillingness

Ion this matter, did you have any further
discussions with him, with Colonel North or^^^^^^^^^^^Jon
this matter?

A No.

Q Did you in your conversations briefing Colonel
on your in^^^^^^^^^^^^^^^^^^^^^^Hinform
of your third option, the diversion option?

Q Yes, sir.

A No.

Q How about

A Yes.

Q -What did you say to Colonel North?

A Well, I said that — told him that I knew that
*as interested in buying some weapon systems

and that I thought that it might be possible that one of the
contractors could share their commission with the Contras if
we approached them in the right way.

Q How did Colonel North respond to that?

A I don't remember his specific response. Generally
speaking, he was noncommittal when I would report these

Hmj^sii^ifflT

935

MIMS^

visits, and that was understandable. But he was receiving

' information basically from me, and there was not a lot of

I made no effort to find out what he was going to do with the
information. My obligation was to present him with what I had
^ done and let him carry the ball.
" Q Why was that your obligation, sir?
' A Well, I was not, in my view, acting irresponsibly,
° I wanted to be sure that government officials who were obvious
' ly in support of the Nicaraguan Freedom Fighters knew every-
thing that I was doing in that area, and Oliver North was the
obvious point of getting that information into the system.
''2 He had been my contact on Central America before the Boland
'3 amendment and remained so afterwards.

14 Q General, did you in May of 1985 have a conversation

15 with a reporter from the Washington Post?

16 A I don't remember.

17 Q Did you tell the Washington Post that you had

18 raised almost $2 million outside the United States for arms

19 for the Nicaraguan rebels?

20 MR. KELLEV: Could you perhaps give him the date

21 and reporter that wrote this story? Maybe that would help.

22 (Handing an article to witness.)

23 THE WITNESS: No. I doubt that — I can't remember

24 having said that, and I must say that any conversation that I

25 had with Peter Stone, who is the reporter of this article.

IKiia/iSQioiiBlr

936

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PtSECRBT

iLAOuii %L.U

^ has been very antagonistic. I consider him an unreliable

2 person. I had minimum conversation with him, and I think --

3 the many times he has quoted me when, in fact, I did not say
^ what he claims I said -- he is a totally unreliable reporter

5 BY MR. BALLEN:

6 Q Let me just ask you a yes or no question. Did

7 you tell him that you had raised $2 million outside of the

8 United States?

9 A I can't imagine that I did.

10 Q So your answer would be no?

11 A No.

12 Q General did you —

13 A Let me make a distinction there. There has always

14 been question of raising money outside of the country, and

15 I did not admit that I was doing that, but that — there was a

16 mechanism within the FDN to do that, and that money was being

17 raised outside the country by the FDN and deposited in one of

18 their overseas accounts against which they hoped to draw for

19 the purchase of arms .

20 Q General, in that seune interview, did you tell Mr.

21 Stone or anyone else from the Washington Post that the United

22 States, drive by the United States Council for World Freedom

23 was bringing in $500,000 a month for the Contra cause?

24 A No. I think that —

25 Q Your answer would be no?

TOP SF

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937

UNSIASSI^Iiirr

A The answer would be no, but I remember how I was
surprised to read the figure, and I remember how it came
about, and that is the statement by Adolfo Calero, which I
said I have to accept, he said a certain amount of money had
been raised over a given period of time of ten months, I
believe. So this reporter at the time said, "Well, if they
raised $5 million over ten months, that is a half a million
dollars a month, is that right?"

And I think I said, "Well, that arithmetic is
correct. "

Q You never told him the United States Council for
World Freedom was bringing in $500,000 a month?

A No, no, I did not.

Q On February 26, 1987, there was an article in the
Washington Post written by Ben Wiser which quoted you as
saying that you had raised more than $10 million for the
Contras in humanitarian and other aid. Did you tell Mr.
Wiser that?

A Yes.

Q Is that true. General, had you raised $10 million?

A Again, I get back to the same statement that I made
before, that I was unable to make any estimate of how much
money we were raising because most of the activity was in
in-kind contributions, but that Adolfo Calero had estimated
that we had raised approximately $10 million in the public

uWkAaSirKffr

938

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sector — private sector in the efforts that I was coordinat-
' ing. That included working with the other conservative
** organizations in the United States.

Q How much money in 1985 did the United States
Council for World Freedom raise for the Contras?

A I don't know. I would give you the same answer
Q Do yon know your financial statement showed
$279,612.49?
' A That's quite possible, yes

'^ Q Referring to 1986, how much money did the United
" States Council for World Freedom raise for the Contras?
^2 A I don't know.

13 Q Would it surprise you if your financial statement

14 showed $280,798.38?

15 A No.

16 Q Does that seem like a correct figure?

17 A It probably is, yes. Again, I have to say that an

18 awfu-l lot of the contributions were in-kind. People would pay

19 directly to a vendor rather than paying through the U.S.

20 Council

21 Q Isn't it a fact. General, the in-kind contributions

22 that you raised were in late 1984 for a shipment of medicines

23 to the Contras?

24 A Well, that is true. There was a large shipment

25 several shipments in 1984 of medicine. After the humanitarian

nwRffSMniTlir

939

aid bill was passed, we de-emphasized that as not i . .^
necessary .

Q But apart from the shipment of medicines that
arrived in approximately December of 1984, were there any
other in-kind items that you were personally responsible for
raising for the Contras?

A Yes. There were shipments of outboard motors,
small boats —

Q Didn't you buy those boats in the United States,
General?

A Yes.

Q Did you buy those boats with money raised by the
United States Council for World Freedom?

A Yes.

UNCUSSiriFO

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Q So those would be as part of the transportation
equipment that is shown on the United States Council for
World Freedom's statement; is that right?

A That is right.

Q Go back to my question then; what in kind con-
tribution other than medicine in late 1934, were you
responsible for raising for the Contras?

A I repeat my statement -- outboard motors.

A What was the value of the outboard motors? Those
were not

A Those dollars were contributed directly from the
donor to the boat shop in Miami, to provide them, and 1 think
that was $12,000 to $15,000, something like that.

Q General, in addition to that, the outboard motors
that you have specified, the medicine in December 1984, what
other in kind contributions were you responsible for raising
for the Contras?

A Well, I believe that there were some other medical
supplies and a jeep ambulance that was purchased by a group
in Louisiana that was delivered directly to Mario Calero's
warehouse. I think there were donations of medicines that
were taken. We had paid for transportation or negotiated
free transportation to move it from Michigan to New Orleans,
another shipment to Miami.

Also, some collected at Fort Meade and transported

im^eEfe

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mmm

MR. KERR: What was collected at Fort Meade?

THE WITNESS: Medicine and medical supplies.

BY MR. BALLEN:
Q When was this?
A I think in early 1985.

Q Were any

A Excuse me. I was acting -- what we did is, I
sent a doctor down to make a survey and set up a system of
updating the lists of medicines needed, and then we would
distribute this to other organizations around the country who
had expressed an interest.

A lot of the clothing was being purchased from
surplus stores by local groups of CMA and trucked to New
Orleans.

MR. KERR: What role did you have in that?
Did you work with Mr. Posey?

THE WITNESS: Yes, I met several times with
Tom Posey to try to convince him that his efforts to provide
military advisers who were crossing the border into Nicaragua
was a counter productive effort and that he ought to concen-
trate his efforts and his energy on collecting non-lethal
supplies, and arranging to ship them down. I also did this
with Bill Murray of Dallas, who collected gift packages.

He would send them down, try to send them
down to arrive before Christmas. He did this in 1985 and

i»m!^Eti&T

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1986. I read recently there are 20,000 of these gift packages
supposedly Christmas gifts, that are still in the warehouse
yet in New Orleans, waiting to be shipped down, as well as
a large number of freedom fighter friendship kits that
my organization is arranging to send down.
BY MR. BALLEN:

Q General, in December 1984, did you say to any
reporter working for Time Magazine that you had raised $500,00|0
a month for the Contras for the FDN since May?

A This gets back to the same quote. I forget who
the reporter was that made the initial computations based on
Calero's statements.

Q General, let me refer to an article that appeared
in the Washington Post on December 10, 1984, by Fred Hiat,
"Retired General John K. Singlaub, President of the World
Anti-Communist League, said he and others have raised about
$500,000 a month from the wealthy U.S. citizens and groups
since Congress cut off funds for CIA-backed Contras fighting
the Nicaraguan Sandinista-backed government."
Did you tell him that?

A Yes. I don't remember, to be frank, but I do
remember that that figure was raised as a result of Adolfo
Calero saying the private sector, lead by General Singlaub,
has raised $500,000 over the last 10 months, and somebody
then divided that up and said, "That is $500 a month; is

that correct?'

943

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And I repeatedly said, "If Adolfo Calero said that
is his estimate, I accept it."

The trouble is, as you know, once you make a
statement and it gets in somebody's computer, anybody else
in the world can call up that and the same lie can be told
over and over again, and any efforts to correct it never
seem to be attached to the same statement.

Q General, in Sep^mber and October 1985, do you
recall being interviewed by 'Common Cause Magazine"?

A No. Who is the reporter? I might know the name

MR. KERR: All I have is the magazine article.
The article said you were interviewed in Tucson following your
speech to the River Rats. "While being interviewed in Tucson
in 1985, after a speech to the River Rats "

THE WITNESS : I remember speaking to the River
Rats. The River Rats is a veterans organization of Air Force
Vets who fly the jet aircraft in the Red River Valley of
Vietnam.

What is that month?

MR. KERR: The article was published in the
September-October issue of "Common Cause Magazine."

THE WITNESS: What year?

MR. KERR: 1985.

MR. KELLEY: Maybe you want to put a question about
what the article says?

Tdt^'^iF&S&lilfn

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MR. KERR: Do you recall telling a reporter from
"Common Cause Magazine" that "In the last year we have raised
tens of millions of dollars for arms and ammunition and
millions more for non-military supplies"?

THE WITNESS: No, I don't remember that.

MR. KELLEY: Let the general take a minute and
read the whole thing here. It might refresh his recollection

MR. KERR: Sure.
(Brief recess.)

945

HNSMSS/flffiT

THE WITNESS: I remember this interview. I think
it was a woman, because I recognize the picture there. I
am confident that I did not say I raised tens, plural, of
millions, but 10 million.

MR. KERR: Did you tell the reporter you had raised
$10 million?

THE WITNESS: I don't — I remember at the time
hearing about this article. I don't think I ever saw it.
I don't take "Common Cause Magazine."

MR. KERR: You did give the interview to "Common
Cause Magazine"?

THE WITNESS: She did not indicate she was working
for "Common Cause" or I doubt that I would have given the
interview to her, and I remember someone who was present at
that interview telling me about this article, how that woman
misquoted what I had said. And I am confident that I did
not say that I raised tens of millions of dollars. It may
be that I said tens of millions of dollars have been raised
outside the country. That is the statement — again, getting
back to Adolfo Calero's statement.

MR. KERR: You, yourself , did not take credit for
having raised that money?

THE WITNESS: No.

BY MR. BALLEN:
Q General, did you tell anyone from "Time Magazine"

ara)t»JsiEid^T

946

mmm

in May of 1985 that contributions raised in cash and in kind
were up to $500,000 a month?

A No. I think that gets back to the same statement.

Q All right. That is fine.

General, did you have a conversation with anyone
from 'U.S. News and World Report" in or about September 1985
where you had said that the United States Council for World
Freedom along had sent several million dollars worth of goods
to the Nicaraguan insurgents?

A Yes, I probably did.

Had

you sent several millions of dollars worth of

goods?

A Yes.

Q What were the several million dollars worth of
goods — the medicines in 1984, what was their value?

A Again, I don't know except the doctor who did
the analysis for us said that the one aircraft load contained
a million dollars worth of medicines. But when I tried to
pin him down as to how do you estimate that, he said it
would sell for that etmount of money.

Q Had he sent one aircraft load down to

A He went

Q Who is the doctor, please, general?

A He is the head of Tom Dewey Institute in New
York, whose name I forget right now. He is also head of

vmmik

947

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fWSWfflET

1
2

another organization called Intermed, offices in New York.
I could get that information from our files in
Pheonex. He gave us several leports. We paid for his trip to
go down and survey the situation on both the northern and
the southern front, and make estimates of what was needed.

He also made several trips to select the medicines
from World Medical Relief in Detriot, and earmarked

Q Did he tell you the value of the medicines he had
sent down to the Contras? Did he specifically tell you the
value of the medicines that he had furnished?

A He gave an estimate. When I challenged him to it,
I said, well, how do you know that it is worth several
million dollars?

He said, well, the stuff that was loaded on such
and such a plane, he was confident was worth a million dollars

Q Did he specifically tell you that the value of the
medicines that they had shipped down to Nicaragua

A Medicines and medical equipment.

Q was worth several millions of dollars?

A Yes.

Q General, referring back again to the Benjamin
Wiser article in the Washington Post on March 20, 1987,
did you say to Mr. Wiser that you had told Oliver North of yo^r
proposed diver sion^^^^^^^Hand they had replied that it
would probably work?

rvr\

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948

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mmE

A Yes.

Q Yet you told us earlier today that he was, Oliver
North, was noncommital?

A Well, I said he was generally noncominital .

Q Which is it? Was he noncommital or did he say that
the diversion would work?

A I honestly can't remember what his reply was, but
my recollection is that it was some noncommital answer, it
was probably somthing in a casual way. It was not a specific
proposal and I think he was -- Wiser was trying to establish
,hen he camato me that I am the one that gave Oliver North
the idea of diverting arms profits to the Contras.

Q Wasn't it you who had told Mr. Wiser that?

A No, absolutely not. Absolutely not. No. He
came to me with the story that someone had told him that I
am the guy that set this whole thing up, and I was trying to d^
sme damage control, or I would have never talked to a reporter
at that time. But when he told me that someone had said that
was the guy that had the whole brainstorm of this thing,
I said, well, that is simply not true. And the only thing
that could be construed as that is one of the options that I
had presented tc^^^^^^^^^^^B when I asked them for money
was the possibility that a vendor would share the commission
with the Contras, if we had the right one.

Q General Singlaub, did you ever tell any reporters

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949

HNKimUT

jm 10

from the New York Times in October of 1986, that you had raise
between some $10 and $12 million for the Contras?
A I don't remember that.
Who was the reporter?
A Jeff Gert and Wayne King.
, Q I don't remember ever speaking to those people.
Q Are you aware of another report in the Times where
Joyce Downey, the executive director of the United States
Council for World Freedom, on October 13, an article by Robert
Rineholt, said that the council had provided between $10
to $25 million in cash and in kind aid to the Contras?
A What is your question? Am I aware of that?
Q Yes.
A Well, I am now, but I was not aware of it at the

time. It gets back to the same figure that has been

Q Okay.

A quoted.

Q Now, general, in early 1985, or at anytime in
1985, did Barbara Studley approach you as to your role with
the Contras? Did she question you about that?
A Yes.

Q And at that time did she ask you why you were
prominent in the media, or words to faat effect, in substance?

A Yes. She expressed concern because I was listed
as a consultant to her firm and because the media seemed to b«

imiau^BiiiE;

950

jm 11

(fflMtncr

concentrating their attention on my fundraising efforts,
that this was creating problems for her with some of her
clients who did not want to do business with someone who was
so actively involved in providing help to the Nicaraguan
Freedom Fighters.

Q Did you tell her at that time that William Casey

and Oliver North

MR. KELLEY: Can you per»as just ask the general
what did he tell her?

MR. KERR: No, we are going to ask

MR. BALLEN: No, I am going to proceed in this

fashion.

MR. KELLEY: I thought you might get a better

MR. KERR: Why don't you ask him?
MR. KELLEY: Okay.
BY MR. BALLEN:
Q General, did you tell Barbara Studley at that time
in response that William Casey and Oliver North had given
you the responsibility to act as damage control for the
Nicaraguan private manufacturing program?

A I do not believe that I ever said that, because

it certainly is not true, but

Q Let me ask the next question.

Did you ever tell Barbara Studley that you were

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imeimii^

given this role by Oliver North and William Casey soecifically
because "you could take the flack"?

A No. I do not believe that I said that.
Q Let me ask you the next question. General.
Did you ever tell Barbara Studley that it was very important
for you to be highly visible in the media because press
reports had already started focusing on Oliver North?

A No, I don't believe I ever said that either,
although the general subject was a part of the discussion when
she expressed concern about my high visibility. I had to
point out that my high visibility in fundraising was essential
to the success in raising funds, and that there were some
benefits.

Q In fact. General

MR. KELLEY: Can you let the General say what
he said? He hasn't had a chance to answer what he said.
MR. BALLEN: He has had a chance to answer.
MR. KELLEY: No. Every time you go on to the next
question- — he is in the middle of telling you what he said.

THE WITNESS: I can understand how she might have
assumed that this came from somebody above, if she heard
it from other sources, but I did point out in the discussion,
I said, it is not possible to raise money without having
some visibility, you have to give a speech or you have to
write letters, you have to communicate, and in the course

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of doing that you admit that you are raising money for the
Contras or you don't get it, and that there were some benefit
to this to include benefits in terms of morale for the
freedom fighters. This had been expressed. They appreciate
sor.eone was willing to admit publicly that they were helping
them.. And in that discussion, I might very well have pointed
out that if there is a single lightening rod for all of this,
it makes it easier for others who want to have less visibility
in doing what they are doing in support.
BY MR. BALLEN:

Q Did you tell Barbara Studley at that time or at any
subsequent time that Williaun Casey and Oliver North had asked
you to hire a public relations firm in order to promote your
efforts in fundraising?

A I know thati never mentioned William Casey as
having given me any instructions, because Bill Casey was
so adamant.

Q So your answer to the question would be no?

A The answer to that is no.

MR. KELLEY: I think the answer to that is no
with respect to Mr. Casey, but you haven't answered with
respect to Mr. North.

THE WITNESS: To Oliver North, he never asked
me to get a public relations firm, but one was recommended
to me by Rob Owen, and I know that Rob Owen had had contact

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with Oliver North, and it is my belief, as I reflect on this,
that Rob Owen recommended Carter Clews, and it was Clews
Communications that was eventually hired to help manage
the media problems that I was having here in Washington, that
it was considered a friendly public relations firm and one
that would be trusted.

Whether he specifically mentioned Oliver North,
I don't remember, but he was one of my contacts with Oliver
North after I started avoiding going to his office or calling
him direct.

BY MR. BALLEN:

Q Did he suggest to you that this public relations
firm be hired, Mr. Owen?

A Yes. He is the one who introduced me to Carter

Crews.

Q Did he suggest to you that you should hire this

public relations firm?

■ A I think, yes. I had expressed concern about my
inability to respond to media inquiries, most of which were
generated in the Washington area, and in discussing this
with my board of directors, they said, well, perhaps we
should hire someone to take your inquiries here and have a
consistent answer. And in my search for one, Rob Owen
recommended Carter Crews and brought Carter Crews to my
hotel and introduced him to me, and therafter I hired

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1
2
3

mOTiB

Crews Communications to take the press inquiries here in
Washington.

Q What date was that?

A I can't answer that specifically. I don't

I am sure that Crews Communications could orovide that

answer.

1985?

MR. KERR: Can you give us an estimate? Wa? it

THE WITNESS: I think 198 5.

MR. KERR: Early 1985?

THE WITNESS: No.

MR. KERR: Can you do better than that? Summer,
Fall, Winter, Spring?

THE WITNESS: Okay, let's see, it was probably in
the summer, because the first time I used him was for the
September conference that I hosted in Dallas, Texas, of
the World Anti-Communist League. And he handled the press
on t-hat for me. And thereafter -- and immediately before
that, he worked with a fundraising firm they had also hired
for that conference.

BY MR. KERR:
Q What firm was that?

A I was afraid you were going to ask that. It is a
firm well known firm here in Washington that had a sub office
in Dallas. I would have to get that name. Carter Crews

ibASraniftT

955

UNQASWk-

I am sure could tell you what that was.

Q Who had recoitunended the fundraising firm?

A Perhaps Carter Crews, but I am not sure of that.

Q Who paid Carter Crews' fees?

A The U.S. Council for World Freedom.

Q If we go through your financial statements for
1985 and 1986, we will see items on that?

A Yes. It may have come out of — the payments
for his work in Dallas probably were covered in the budget
and reports of that conference. That was a separate account.
It was called the Walker Conferencing Account, and that was
held separately — it was a $300,000 budget, as I recall, and
about $25,000 went to the fundraiser and a few thousand to
Carter Crews for handling the media.
MR. KERR: Thank you.
BY MR. BALLEN:

Q Apart from that payment to Carter Crews, what
were your total payments to Carter Crews and your media in
1985?

A I can't remember that for certain. I remember
the last report we had, we still owed him and were paying off
so much a month. We owed him over $6,000 at I think the end
of 1986.

Q Do you recall how much you paid him in 1984?

A No, I don't remember. Those would be in the

WMSm

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jm 17

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records. Those would be in the records.

Q Did Oliver North ever ask you to serve as damage
control with the press?

A No.

Q Did William Casey ever ask you to do so?

A Absolutely not.

Q You mentioned a second trip

Well, I don't like the t
Did you travel to
Yes, I did.

Did you travel with Barbara Studley on that trio?
No, I did not.

Did you carry with you a letter from the Israeli
Government appointing you as the representative for the sale
of^^^^^

A No, I don't believe that I carried that with me.
Q Did you receive such a letter, sir?
A I knew that one had been received. It was received
at the Office of GMT here, and I was told that I had been
given thit authority by the Israeli Government. This came
in subsequent to my visit to Israel in April of 1905.

Q The letter came subsequent . tOj your visit to
Israel in April 1985?

"^(9WSg*HfiftT

957

IM'AMIfr'

A I believe so. Although I am not even certain of
that. It was about that same time, March, April time frame.

Q When did you travel to Israel, sir?

A I went to Israel in -- entered Israel on the 16th
of April and departed on the 21st of April 1985.

Q Who did you meet with when you went to Israel,
officials from the Israeli Government?

A I don't remember all of their names at that
time, but I did meet with the guy that signed that letter
who was head of procurement, Colonel Roiter, and he arranged
for me to visit a lot of the Israeli defense industries. I
also met very briefly with the Minister of Defense. I met
with several retired military officers who helped arrange
my visit.

I was looking at the variety of weapon systems
being produced by the Israelis.

Q Let me ask you this question. Did Mr. Roiter
talk, to you about the|

A Yes.

Q Had you had any prior discussions with him on

[prior to your trip to Israel in April

1985?

No, no. The only Israeli official I would have talked
to would have been Colonel Simhoney, who wa^ the defense
attache here, Orie Simhoney.

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jm 19 ^

llfBBISSSMeET

Q Did Mr. Roiter at that time indicate to you that
you would be, or GMT, an exclusive representative onl

A Yes.

Q Was that confersation as a result of -- were you
aware of that before you went on your trip to Israel, that
you would be the exclusive representative or GMT would be?

A My recollection is, yes, I knew about it in
advance. Although that was just one of a variety of weapon
systems that GMT was getting exclusive rights or representativ
rights.

Q Did you have any discussions prior to that
time with

Ifrom the Israelis?

A No ; my recollection is it was on the July trip
that I made arrangements for GMT representatives to meet
with the appropriate of f icials^^^^^^^^vto discuss this.
I was there^^^^^^Hand I think I set up visits for^^^f
[for Barbara Studley and some experts from

Israel,

the!

Prior to July, though, you had not discussed with

That is correct.

When you went in July to visit the

officials at that time, did you raise with them the option

y^m<^^EIS<^T

959

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oif diverting money to the Contras in connection with the

A I certainly did not mention it to the people
that I set up -- that I talked to abouti
The only person that I mentioned that to was'

when I discussed this idea of the possibility
of sharing commissions.

MR. KERR: You indicated you said that to him
in January 1985. Now we are in July of 1985. Did you
meet with him again and mention it again to him?

THE WITNESS: Actually, I met with him several
tines, and I discussed this subject, but I — in that year
I think I was there two or three times, and I don't remember
specifically on which visit I discussed that.
BY MR. KERR:

Q Let me come at it a different way. Do you
recall discussing with ^^^^^^^^^^^^^H — his name
what?

A ^^^^^^^^

Q With regard to^^^^^^Hdid you ever mention to
him thatyou were interested in selling thesaj
and that they could be used as a device for generating
contributions to the Contras?

A Quite frankly, I don't remember if I — my
recollection, the first time I mentioned that possibility

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MffitASSfFfflT

was on my -- the first time when I was thinking in terms

capabilities that they were asking about. It was not until

I that knew about^^^^^^^^^^^H And
don't remember if I mentioned that in my visit in -- I
know that I called on him every time I go ^o^^^^^l because
he is an old friend, I have called on him and discussed
a variety of subjects.

Q Since that time you are aware of, are you not,
that GMT had discussed the sale of]

lot from Israel but other sources?

A Yes.

Q You are aware, are you not, that
in recent history, late 1986, early 1987, have expressed
concern that the pricing of HHH[|^^^^^^| would include
monies for the Contras? You are aware of that, aren't you?

A No.

Q You are not aware of any letters going from
to ^l^^^^^^^^^^^^^^^ladvising no
in and no desire to use the sale of^^^^^^^Hin 1986 and
1987 as a device for generating money for the Contras or any
other resistance movements?

A No.

Q You never discussed that matter with General

Schweitzer?

TOib'ffiSFfcBr

961

jm 22

A No.

MR. BALLEN: I would like to mark this as
Cominittee Exhibit Number 1.

(The following document was marked Singlaub Exhibit No. 1
for identification:)

COMMITTEE INSERT

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BY MR. BALLEN:

Q I would like to show you what is a two-page

exhibit ttet has been marked Committee Exhibit 1, and ask you
if you recognize this document?

A Yes, I do recognize it.

Q How do you recognize it, sir? Have you seen

it before?

A Yes .

Q And when was that?

A I am not sure. Certainly in 1985 I was told
about it. I believe I was shown this before my visit in
11985.

Q Did you bring it with you tc

A I don't remember whether I did or not. I should
have, but I don't remember taking it with me. I don't
remember presenting it to anyone. I believe that I may have
had it in the event they wanted to know if I had this.
All I did on that trip was to set up appointments with the
appropriate officialsl

Q YOu said that is all you did on the trip?
A Yes. I was there for another purpose. I mean
with respect to GMT business, that is all I did. What

Mba&eimBiT

963

jm 24

Mmm

I know about^^^^^^^Hyou can stick in your eye. I didn't
want to get involved in a technical discussion!

Q In a statement in this letter, we understand --
let me strike that.

Let me go back to an earlier part of your
testimony. You testified that you had not had any dicussions

t he^^^^^^^^^^^^^^^^Ho f f i c i a 1 s
transaction prior to July of 1985. Would that be a fair
statement?

A That is correct; yes. To the best of my
recollection, yes. I don't think we knew about this until
after my January visit.

Q General, in the spring of 1985, did Adolfo Calero
approach you about purchase of arms for the FDN?

A Yes.

Q Did he say he had $5 million available for the
purchase?

A Right.

Q And at that time, did he tell you North had
arranged for other arms to be supplied to him and the FDN?

A I am not sure whether it was Adolfo Calero who
told me that, but I knew that others had arranged for
arms, yes.

Q Did he tell you that North had specifically

Httf^H^^lfflT

964

jm 25

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arranged for arms?

A No, I don't, I can't — I don't recall a
specific conversation in which he said North had arranged
it.

Q Did he tell you that General Secord had arranged
for the shipments of arms to him?

A The answer is generally, yes. I, in fact, met with
General Secord and Oliver North and Adolfo Calero. Adolfo
Calero and I went to Oliver North's office on one occasion
and John Secord was there.

Q When was that, sir?

A I eun not sure I can answer that, but I believe
it was after the shipment that I arranged for had been
either started or had arrived. So that would put it in the
sununer of 1985.

Q Prior to that time, when Adolfo Calero apprj^c)ched
you in the spring of 1985, stating they had $5 million
available to purchase arms, had he told you that General
Secord had previously supplied him with arms?

A I don • t remember . I honestly can ' t remember
whether he had mentioned Secord. I know that he had gotten
other arms. I don't remember whether I knew of Secord 's
operation before that meeting in Oliver North's office.

Q Did he tell you that Secord was response for
raising for the Contras between $15 and $25 million in

965

mmm'

in donations?

A No.

Q Did you approach Barbara Studley in reference
to your desire to purchase these arms?

A Yes.

Q And did you subsequently have a meeting with
Adolfo Calero and Barbara Studley concerning the purchase
of the arms?

A Yes.

Q Who else was present at that meeting?
When would it be? Let me back up. I aim sorry.

A If that is important, I might be able to look it
up in some documents here.

MR. KELLEY: While he is doing that, let's
take a short recess.
(Brief recess.)

UNCUtSSIHEO

TOP SECRET

966

jm 27

(Back on record.)

THE WITNESS: The answer to the question when did
I meet with Barbara Studley, Adolfo Calero and Sam, as we
have named him — I guess you have his real name, which
is Werner, C-1-o-t-s. It was in April 1985.
BY MR. BALLEN:

Q Why do you guess we have his real name?

A Well, I have given it before.

Q To whom?

A Oh, I guess that was to the independent counsel
people. Werner Clots is the man who arranged for the
shipment of arms. He is the professional arms merchant.

Q When did you give that name to the independent
counsel?

A In an informal hearing before the grand jury.
Because it came out, it was mentioned in the grand jury
hearing.

Q Now, sir, in regard to that meeting, was North
present at that meeting?

A No.

Q Where did the meeting take place?

A To my recollection, it took place in the Sherton
Carlton Hotel at 16 and K.

Q General, who had introduced you to Mr. Clots as
you know him?

967

mmm

A I didn't meet with him until the meeting with Barbara
Studley and Adolfo Calero, but General Graham, Daniel Graham,
had told me that he knew of a very reliable, honest arms
dealer who had worked with him when he was the director of
EOA and earlier when he was Deputy Director of CIA, and he
gave me the name of this individual. And I said, well, I
would appreciate it if you would introduce him to Barbara
Studley. So Barbara Studley met him through Daniel Graham.

Q When was this?

A I believe that was in early 1935.

Q Prior to your con'^ersation with Adolfo Calero
on the $5 million available for arms for the Contras?

A Yes.

Q And why at that time did you ask General Graham
for reliable arms dealer or for any arms dealer?

A Well, because you need bullets and guns to fight
wars and the Nicaraguan Freedom Fighters were in such a
conflict, they were running out of ammunition. I mean,
I had been talking to Adolfo Calero since 1984, ad I have been
working with him

Q When you asked General Graham for a reference, an
arms reference, did you know at that time that Adolfo
Calero had money available to purchase arms?

A No. I don't remember — I don't remember whether
I knew that they had it or how much they had, I wouldn't

itt)eM<^iti&T

968

WWSIBiftT

jm 29

remember. I do know that I had discussed with General
Graham how does one go about contacting an international
arms dealer who can get weapons from the Soviet Bloc? That
was one of the things I had introduced into the discussions
was the -- and convinced, I believe, Adolfo Calero and
Enrique Bermudez we ought to use Soviet designed weapons
rather than U.S., so that as units defected to the Contras,
the Contras would be able to supply additional ammuniton --
in other words, standardize on the Soviet weapon systems just
for the logistical advantage that that would have. I asked
General Graham, since he had been in CIA more recently than
I had, if he knew how to go about this, and he said, well,
there are a lot of these guys, but here is one that is really
good and you can trust him.

Q When, sir, approximately was that?

A Either late 1984 or very early 1985, like
February or March of 1985.

Q That was before the time Calero had approached
you stating that he had $5 million available for purchase
of arms?

A I believe it was, I don't remember when I learned
what he had available. I know he was in the process of
raising money. I knew as early as late 1984 he had a
mechanism in the FDN for contacting people around Latin
America that were sympathetic, raising money, and this was

Dtlftll^UfikHlr

969

mSBBffiF

end #2 21

end jm 22

being kept in an overseas account. The assumption at that
time was eventually we are going to be able to use that
money to buy weapons, and on my March visit to the Nicaraguan
Freedom Fighter camps is when I brought up the subject of
standardizing on the

Q March 1985?

A March of 1985, yes. Is when we restandardized
that, and then talked in terms of packages, grouping
weapons, buying them so if we bring in a thousand men you
will have a need for a thousand rifles, but then you also
should also have some RPG-7s in a given quantity and some
mortars and various support weapons that would go with thc.t.
Bermudez and I spent several hours discussing this arrangement
and I think that it was — Adolfo Calero was on that visit

I discussed this with Enrique, and came
upwith a list of what they needed. By that time it was quite
clear the number of people volunteering to join the freedom
fighters was increasing and we needed not only anmuniton but
we needed additional weapons.

n^Wr

970

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jm 31

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Q This was in March of 1985?

A March of 1985.

Q Were you aware of the fact that Calero had purchasec
at that time $10.9 million worth of Soviet made arms for the
Contras?

A I learned at some point, I think later, that they
had already had arms on the way, yes.

Q Did you learn that they had purchased at that lime,
in March of 1985, $10.9 million worth of arms for the FDN?

A No, I did not learn that figure until much later.

Q When did you learn that figure?

A I don't remember the exact date, I can't place
it in time. I later learned that they had only $15 million
and that the — a little over $15 million available in their
accounts overseas, and I knew that the 5.3 that they made
available to me was the last.

Q And you knew that from conversations with Adolfo
Calero?

A Yes.

Q Referring to your meeting in April with Werner,
Calero and Studley, what was discussed at that meeting?

A I think it was basically to get his, Werner's,
agreement that the list that we had could be provided, that
he could provide it, and a firm statement of price.

Q And what list did you present, what was on the list:

wmi

u^:)nl;^

971

mmm

Do you have any documents that we requested last time that
you wish to make available to us?

A I don't remember which documents were requested,
but I have some documents here. I have the list here.
Q Do you want to show that to us?
A Yes.

Q We also requested the ship's manifest.
A I think I have that, too. In fact, this whole file
is a file that had been maintained for me by GMT, and I asked
for it the other day. So I don't have it — it has got the
whole thing here, the report from the man that rode the ship
and the manifest, the masters report, and so forth.

Do you want me to answer the question so he
can write it down?

Q No. wny don't you at this time turn over
those documents and we can talk to you about them.
A Okay,

Just give him the whole file?
MR. KELLEY: Why don't you record that we are
providing you a file of documents that is labeled "General
Singlaub shipment, 20 June 1985." There is a number of
documents in there.

Do you have copies?

THE WITNESS: Thatts my only copy.

MR. BALLEN: We will provide you a copy

liMftbKSffiffAET

972

jra 33

Oil

These are documents turned over, we assume, in
reply to a subpoena served in March of 1987.

MR. KERR: So we all understand, these are not
documents that come from your own files, these are documents
made available to you by GMT; is that correct?

THE WITNESS: Those are my files. I wanted to
make sure that there was a distinction between my ac*-.ivities
with the U.S. Council, so I was acting as an individual
on this, not as chairman of the U.S. Council.
BY MR. KERR:

Q This was maintained by GMT?

A It was maintained by GMT for me.

Q You would direct what documents went into it?

A Yes.

BY MR. BALLEN:

Q Sir, when was this file given to you that you
have produced to us?

A I had that file when we met before.

Q In your personal possession?

A Yes.

Q With you?

A I did, yes. Well, no, I don't think I had —
in the office. I had it in my possession. I think it was
in my BOQ room at Fort Myer, the date we met.

Q That would be in March of this year?

Yes.

m&ssei&r

973

mkwm

Q You said the file was maintained by GMT?

A Right .

Q When did you obtain the file from GMT?

A I forget what day I first met with you or
whether I met — no, I met with the FBI first. When I
got notification that I was going to meet with the FBI
I stopped by that office and asked them to puU that file.
I took it with me the day I met with the FBI, they did not
ask for this.

Q So it was at that time, some time this year, after
you met with the FBI, but prior to meeting with us, you asked
GMT for the file?

A That is correct.

Q Now, sir, you said there was a list presented
to Werner at the meeting in April. Would that be correct?

A Yes.

Q I will show you — we will mark this as Committee
Exhibit 2.

(The following document was marked Singlaub Exhibit No. 2
for identification:)

COMMITTEE INSERT

974

mmm

jm 35

BY MR. BALLEN:

Q This is the last sheet in the file that^ou have
just handed us, sir.

A Well, in chronological order, it is the first.
It is the bottom of the file.

Q It is at the bottom of the file.

Let me clarify that. Let me show it to you.
A Yes.

Q Was this the list that was presented?
A To the best of my knowledge, this is the exact
list. I think I had asked Adolf o Calero to be sure that
he agreed with it, and it is just signed Al. I gave him a
copy at this time.

MR. KERR: That is with the May 15th date on it?
THE WITNESS: 15 May, yes.

MR. KERR: 15 May 19

THE WITNESS: 85. Right.

BY MR. BALLEN:
Q When did you give this to Calero to sign?
A Well, it was in relation to the meeting that we ha
had with Werner. I don't remember whether he signed it
afterwards, whether we made some revisions to it as —
I think we we did. I think we had another one we actually
took to the meeting and then later we made some modifications,
and I don't remember what it was, but to make it come out

Illtf£)l<^»»filET

975

mjmsF

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even with respect to the quantities and the packaging, we
made some changes, small changes.

Q Did you show that list to Oliver North?

A I don't remember whether I showed it to him or
whether Adolfo Calero showed it to him, but I am confident
that he knew of it.

MR. KERR: How do you have that level of confidence^
THE WITNESS: Well, because at a meeting with him
I made reference to it. He says, yes, I know the list, or
I started to tell him what was on it, he said, no, I have
seen the list,

BY MR. KERR:

Q When would that meeting have taken place? In the
April-May period of time?

A Yes, probably May.

Q May of 1985?

A Right.

Q Where would the meeting have taken place?

A I don't remember. I don't remember whether it was
in hisoffice or he came to my hotel room.

Q Your hotel room would have been where?

A In the Sherton Carlton.

Q Who else was present?

A Well, if it was in the — I don't remember.
Probably Adolfo Calero — if it was at the hotel it is

llMSIftSiSeMiT

976

UHftSOT^T

jm 37 ^

possible Barbara Studley was there, but I am not even sure
of that. She never went with me to the Old Executive Office
Building when I called on him.

Q Do you know of any documents, notes, memos made

of this meeting?

A No.

Q Any record?

A No.

Q Any one else from staff present?

A No.

MR. KERR: Thank you,
BY MR. BALLEN:

Q Did you physically show him that list?

A I can't remember. I can't remember whether he
had it — you mean the first time?

Q Had you ever seen that list in his possession?
Let me ask you that.

A I remember that he knew the exact quantities
on the list indicating he had seen a copy. I don't remember
whethem gave him a copy or Adolf o gave him one. When I
tried to talk to him about it he was fully knowledgeable.

Q Did Adolfo Calero ever tell you he had given
a copy of the list to Oliver North?

A No, I don't remember him saying that.

Q Did North ever say he had actually seen the list?

uiTOisAaMNKP:

977

jm 38

Mmtw

1 A Yes, he did.

2 Q Did he say he approved of the list?

3 A I don't recall that. It wouldn't have done much
^ good because when we presented it and agreed to it with

5 Werner, he took it and as far as I was concerned the

6 wheels were turning.

7 Q Did you tell Werner Oliver North had approved

8 this list?

9 A I don't remember whether I did or not. I may

10 have told him it was an approved list, or accepted.

11 Q Did you tell him it was accepted by the White

12 House?

13 A I don't remember that. It is quite possible.

14 Q Did you tell him it was approved by the White House

15 this sale of arms?

16 A It is also possible that came up. And whether I

17 told him or Adolfo told him, I don't remember. I do believe

18 that when we gave it to him there was an assurance that we

19 weren't going to make any changes.

20 Q Changes, to the list?

21 A Yes.

22 Q Was there assurances made to him that the United

23 States Government or the White House or Oliver North had

24 approved this list and the sale of arms to the FNA?

25 A I did not give it to him.

IHiCUI^eilT

978

jra 39

inffiajw

1
2
3

Q Did Adolfo Calero say that in your presence?

A I can't answer that. I don't remember.

0 How about Barbara Studley, did she say that in
your presence?

A I don't remember that either. I don't remember
the details of that conversation.

Q YOu had said earlier in your testimony that it
was possible such an item was said, that the White House or
the Administration had approved this list. Why do you believe
that is possible that was said at the meeting?

A Well, I think — I think we were just trying to
assure him we weren't going to be changing the list. We
said this is it, it has gotten everybody's blessing, and Al
was there, Adolfo was there, and we were just trying to get
the idea across that we are not going to whimsicality change
the list.

Q Did you say it had the White House's blessing?

A You keep asking me the same question.

Q You said it had everybody's blessing, so I wanted
to know when you said it had everybody's blessing, whether
you had specifically — when you say everybody, that is
what made me »k the question.

A I may well have, but I don't remember having said
that.

toptScMt

979

jra 40

mmm

BY MR. KERR

Q You recall, do you not, the gentleman you called
Clots was asking whether or not this was a transaction
authorized by the government, whether it was an approved
transaction, for exeimple, it would not violate the law?
Did he ask you those kinds of assurances?

A No, I don't remember that conversation at all.
BY MR. BALLEN:

A You had said there were assurances made the list
would not be changed?

A Right.

Q Isn't it a fact though, subsequently the list was
changed?

A No, not than 1 know of.

Q In other words, this was the — there was no —
well, let me clarify something. You had said that there
were initial discussions on one level of amount of arms?

A Yes.

Q Was there a subsequent point in time when the level
of arms was increased?

A I don't remember. I remember that it was — it
evolved. We weren't sure we were getting five magazines and
I remember insisting that that be listed that we get five
magazines per AK-47.

MR. BALLEN: Let me mark this as a committee

Iff^AffSffUilk

•T

980

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UIIOLMOOiritU

Exhibit No. 3.

I show you this document and ask you if you
recognize it.

(The following document was marked Singlaub Exhibit No. 3
for identification:)

COMMITTEE INSERT

mm^

981

jm 42

ULMOOiriL

2
3

THE WITNESS: It is in the S2une category. It is
a preliminary — I can't answer — yes, I remember, we were

taling about

BY MR. BALLEN:

Q You recognize that particular document, sir?
Have you seen it before today?

A Um?

Q Have you seen that before today?

A I don't specifically remember this. I do remember,
now that you have mentioned it, that we did make some changes
in this, which appears in terms of

Q Let me ask you another question. Why was it
important for you to assure Werner in your first meeting
with him that no changes would be made to the list and that
you would not, to use your words, Whimiscality change the list
Why was that said to him?

A I don't know whether it was the result of a questio^
from him, whether — is this the final list? Because I
believe that Barbara had had some preliminary discussions
wi^ him, and

Q Did she tell you that?

A I don't remember whether — I do know when he
came it was different fromwhathe had initially thought.
There was a difference.

Q Do you recognize the handwriting that appears on

imSHBilT

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(W^fflED

Exhibit No. 3?

A No.

Q Now, sir, in your discussion with North concerning
this list, was that before or after your meeting with Werner,
Studley and Calero at the Sherton Carlton in April?

A I don't remember.

Q Did you have any discussion with Adolfo Calero
as to the prices presented on the amount Werner was capable
of buying arms with?

A Yes.

Q What did Calero say?

A He said, well, if it is true that you can get us
those AK-47s at $135 each, that is about half of what I had
to pay previously.

Q Did he make any comments on any of the other
prices or any of the other elements? Mr. Calero I am referring
to?

A My recollection is that the prices on all of them
were lower than he had previously been charged.

Q Did you discuss with Oliver North the prices on
the weapons that Werner was supplying to Calero?

A I am sure that I discussed the major item, the
AK-47S.

Q And what did you discuss? What did Werner say?
Let me ask what Werner said?

nMekft^^n

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UNli^yigMIJ

A Well, my recollection was that he agreed with me
that was really a good figure, it was lower than what they
had to pay by a significant amount.

Q Did you have any discussions with North as to the
legality of this shipment?

A I had discussions earlier before I got involved
about what are the laws concerning this whole subject, if
all this transaction plays outside of the United States, if
no U.S. banks are used, no U.S. carriers used, no U.S. ports
involved, is this legal? I don't know who he consulted, but
he assured me that that should present no problems.

Q He being?

A He, Oliver North, said this should present no
problem, that the initial list was arrived at as a result
of discussions I had ^^^^^^^^H with Enrique Bermudez, and
that the money was outside of the country, it was never going
to go through this country.

We agreed we would use non-U. S. carriers, no U.S.
bank transactions, and so that it appeared to be completely
legal.

Q So you reviewed that with Oliver North?

A Not specific dollars with this, but in principle
what needed to be done in order for me to help them without
getting in trouble with the government.

Q That was before you had discussed this with Werner

984

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76
or after that discussion?

A It was before.

Q How was the payment arranged with reference to
this

A My recollection is that Werner was to designate a
bank where he had accounts in Switzerland and then I asked --
I was to ask Adolfo Calero to transfer from one of his accounts,
which he informed me he didn't have direct access, he had
to go through some lawyers, and that this was then transferred.

At the time I though it was from the^^^^^Hbank .
Subsequent to that, I think Chuck brought it up, that it was

from a^^^^^Hbank, but from a ^^^^^^^^^^H bank two
increments, and I do remember there were two increments that
were transferred. And so what I did was after we got a price
estimate of the shipping costs, I asked Adolfo to put, or
have transferred to an account, I gave him a name and a
number, and as I say, I thought it was from this^^^^^Hbank
account, to transfer this amount of money there when it was
received we would have the shipment on the way.
BY MR. KERR:

Q With regard to what account the money came out of,
have you had subsequent conversations with Calero or
anyone else indicating which account the money came from?

A No.

Q So you don't have any way of verifying that it
came from the ^^^^^^^^^^^laccount?

^wm

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985

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UNCEK^MO

A No, that is right, other than I think you are the
one who brought it up before, that you could not find it.

Q You are aware two different Swiss accounts were
used at the receiving end; are you not?

A Yes.

Q Are you aware Miss Studley set those accounts up?

A Yes, I think she arranged that. I think
through Werner.

The first so-called account was at Bank Leu, L-e-u?

I don't know that.

Did you have any contacts with the Swiss bankers?

No.

You relied on Miss Studley?

Yes.

With regard to the paperwork generated for those
accounts, did it come to you?
A No.

It came to Miss Studley?

Right.

Did she ever turn it over to you?

No.

So you have never seen the paperwork on those
transactions?

A Not directly from the bank. Subject to this
shipment, we determined there were some residual monies in
that account, and I consulted with Adolf o Calero and he

!Mg&tSRff!rn

986

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3

UlffiBWEO

suggested we leave it there because there may be other
purchases that we want to make, and that if I found any donors
that wanted to contribute to the arms purchase program, that
I could have it sent to that bank account. So I kept a
piece of paper with that bank account number and name on it
for a long time.

Q The National Bank de Paros, in Geneva, Switzerland?

A Yes.

Q You kept that number for a long time. Did there
co;.ie a time when you acquired any records on this account?

A I was shown, I don't think I have in my possession,
I was shown an accounting showing there was about $100,000
left. I gave that to Adolfo Calero, and subsequent to that
he asked me to have several payments made to U.S. companies
that had provided some non-lethal — I said that is a waste
of that money, but he said, "I am desperate, I need it."

So we did, in fact — then contacted Miss Studley
and asked her to have it transferred, certain payments.

Q And you ultimately exhausted that account, isn't
that right?

A That is what I understand.

Q That would have been approximately June 1986,
correct?

A That is correct.

Q At that point, or any lime thereafter, did you acquire

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OlffiltmED

any records on these accounts?

A No.

Q You have no recollection of Miss Studley having
packaged up and sent to you any records on these accounts?

A Well, she did, but I think it was — it was
certainly before August of 1986, because I departed the U.S.
in that time and hadn't been back since.

Q So at some point you had records of these accounts
in your possession?

A She sent me the accounting, which I then sent
immediately to Adolfo Calero or gave to him.

Q Can you describe what that record or records con-
sisted of? What were the pieces of paper like?

A I must say I don't remember. Everything was in
it except for the bottom line, it was something like $39,000,
something like that.

Q Did you retain any copies?

A No.

Q So you turned everything you had over to Adolfo
Calero?

Right.

When was the last time you saw those documents?

Whenever I gave it to him, but I say that that is

sometime prior to August of

86?

86.

l!Nffii8«D

988

jm 49

Q You have not seen them since that time?

A No.

Q Never requested them back from Calero?

A No.

Q You don't know whether he has them at the present
time?

A That is right.

Q Do you know whether Miss Studley has any copies
of those records at the present time?

A I have no idea .

MR. KERR: Thank you.
BY MR. BALLEN:

Q At your first meeting with Werner, Studley and
Calero, were the prices on the weapons already decided upon?

A Yes. My recollection is that these prices were
listed — well, I don't remember whether there was any
negotiations. There was one item it seems to me, that was more
expensive than what we had gotten some place else, I see
on one item there was a reduction on the PRKs. It was listed
at $2200 and then it was reduced to $2000. But I remember
that Werner said, now, those are the prices we are going to
have to pay, there is no commission in there, there is no
profit. And Miss Studley said, yes, I know, but that is
okay.

Q He said there was no profit for him?

mmmn

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A Oh, no, hfe says -

king his profit. But
we don't know what that was. But that is what he could
sell them to us, and he still made a profit as I understand
it.

Q When did you give that list to Adolfo Calero to
sign? You testified earlier you gave it to him to sign.
When was that, sir?

A I think after it was retyped, and it must have been
in May, because he has an OK on it, if that is his initial.
I can't verify it is.

Q Did you give him the list to sign?

A I think I did.

Q why did you do that?

A What?

Q Why did you do that? Why did you give him the
list to initial?

A I just — he was the guy ordering it. I just
wanted to have some recognition that that is the list that
he wanted.

Q But he was at that meeting the list was discussed?

A Yes. I don't know whether these modifications were
made at that meeting and then this list was retyped and we
got him to put his initials on it. I would suspect that that
is the way it happened, but I don't recall.

Q Do you recall who was present when you asked him

IINM^BKD

990

jm 51

lOL

to initial that list?

A No, I don't.

Q But you were present?

A I believe I was. But I am not even sure of that.
I do remember discussing the fact we ought to get his
initials on the revised list.
BY MR. KERR:

Q You discussed that with Miss Studley?

A Yes.

Q Do you recall whether Miss Studley got this initial
on the list?

A It might well have been.
BY MR. BALLEN:

Q General, when was the shipment actually delivered
'to the best of your recollection?

A I think the 8th of July. That is plus or minus
one or two days.

Q In 1985?

A 1985, yes. It was shipped on the 20th of June.

Q After the shipment was made, did you have any
conversations with Oliver North about it?

A After it was received?

0 After it arrived?

A Oh, yes,

Q What were those conversations?

HMfitit^^tWn

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liffilfiSPED

A Well, I turned it over to him, and again I don't
remember whether this was by direct contact or I sent it
through Oliver North or someone else, I gave him a copy of
the report that we received from Felix, who was the guy who

accompanied the shipment, representing

MR. KERR: Michael Fields?
THE WITNESS: Yes, Michael Fields.
BY MR. BALLEN:
Q You gave this to Oliver North?
A Yes.

Q Why did you do that, sir?

A Well, I was asking about his guy Mario Delameco.
His name — that is the report there.

MR. BALLEN: Let's mark this as Committee Exhibit

(The following document was marked Singlaub Exhibit No. 4
for identification:)

COMMITTEE INSERT

'v?*

992

jm 53

end jrn

drg fls
3a

BY MR. BALLEN:
Q I will show you Cominittee Exhibit No. 4, and
ask you if you recognize that document?
A Yes.

Q How do you recognize it?

A Well, I have seen it before. I just gave it to
you. It came out of my file.

MP"

993

Take 3b

drg/fols ]am

BY MR. KERR:

Q When did you first see it, General?

A I would say a week or so after the ship arrived m
July, maybe July of 1985.
BY MRL BALLEN:

Q Who gave it to you at that time?

A Mrs. Studley, I think., gave it to me. She had
gotten it from Werner, as I recall.

Q I presume you read it at that time?

A Yes.

Q After you read it, what did you do with that?

A My recollection is I either took to or sent to Olivet
North a copy of this.

Q Why did you do that, sir?

A Well, I wanted to keep him informed of what we had
done. I had also expressed concern about this person, Mario
Dellamico, who was posing as or who was acting as representatijv
Qf ^^^^^^^g^^^^gat the port and seemed to have such

author _^^^^

And I knew him to be, or he claimed to be an

American, which was strange.
BY MR. KERR:
Q Just so I understand your knowledge, you were not
there when the arms were put on the ship in

That is correct.

\\\mssm

994

drg-2

Miraif

1 ■ Q So you never actually saw the arms you were involved

2 in purchasing, is that right?

3 A Not until after they were in the hands of the

4 troops.

5 Q What you saw in the hands of the troops was Soviet

6 Bloc weapons, but you don't know whether thei arrived on your

7 boat or somebody else's, do you, of your own knowledge?

8 A When I was subsequently visiting

9 either Enriquez Bermudez or Adolfo or one of the other

10 members of the FDN, director, asked someone to get one of

11 those new weapons, and as I recall, I was shown one of these,

12 and they were very proud of the fact this was good quality

13 and —

14 Q Somebody showed you a shining Kalashnakof f , I guess,

15 is that right?

16 A Yes.

17 Q But of your own knowledge --

18 A I have no way of knowing, that is right. I was

19 told this was from the shipment and the quality was exceeding

20 ly high.

21 MR. KERR: Thank you.

22 BY MR. BALLZN:

23 Q That was in August of 1985 that you were shown --

24 you had testified --

25 A I think that is right.

!!fiffHAf;simhT

995

OlffifASSfflffiT

Q You had testified in the beginning of your deposi-
tion in August, 1985, you --

A Yes, that is right.

Q -- were told they had received your weapons.

A That IS right.

Q In fact, who had told you, did Adolfo tell you
that he had received your weapons?

A Well, I had heard from him that they had arrived --
the day, I think the day they came in --

Q Let me make the question clear. In August of 1985,
did Adolfo Calero tell you that his troops were using the
weapons that you had sent?

A Using?

Q In the field, that they had them in the field.

A Yes. My recollection is -- I don't mean to say
that they were in the hands of troops in Nicaragua, but at
least they had some of them in the base camp.

Q That would be |

A That is right, yes.
BY MR. KERR:

Q You were aware of an arms dealer by the name of
Ron Martin at that time, isn't that right?

A Yes.

Q You were aware he had a warehouse or supermarket,

isn't that right?

mmE

996

ilULMOU

1
2

A Yes.

Q You were also aware the place the weapons that you

shipped was taken was that arms warehouse, is that right?

A No, I don' t --

Q You are not aware of that?

A I do not know that for ^ure. I heard --

Q Don't you recall discussing that with Mrs. Studley,
thatjis where the weapons went?

A Well, I believe that — she indicated that, but
I know that she was never there, so I don't know whether
she has first-hand knowledge of it any more than I have.

Q The bottom line is in terms of where they were
stored, you don't know, isn't that correct?

A That is right. Except they were turned over to the
lat the port.

Q They were turned over to Mr. Dellamico, correct?

A No. He supervised the turning over to]

[vehicles there to haul the stuff off.

Q You read Mr. Flynn's report which said it was
Dellamico who took possession, is that right?

A Yes.

Q Dellcutiico worked for Ron Martin, isn't that right?

A That is correct.

Q So in terms of the probable end point of those
weapons, you concluded, did you not, that they went to

iimftS£ie^T

997

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Mr 1 Martin's warehouse, isn't that right?
A No.

Q You don't ever remember telling Mrs. Studley that?
A No.

998

Dotson/drg
Take #3
fols jam

mssm

1 BY MR. BALLEN:

2 Q Let me ask you, getting back to this letter from

3 Michael Fields, you said that you either sent it to North or
^ handed it to North, is that correct?

5 A That is right.

6 Q Did you discuss with North your concern that Mario

7 Dellamico had met the arras shipment?

8 A Yes, I did. Because he had also met several of the

9 air shipments. Sometimes I would send someone along with the

10 air shipments to just see that they were turned over as we

11 had, you know, more sold, or something else.

12 Q Which air shipments were these?

13 A These are shipments of clothing or boots or

14 medicines that we had in some way had responsibility for,

15 either asking another organization — and I would get a

16 report back from either the person who went along or from

17 the guy that was handling my air operations, Ed Deerborne,

18 that this guy, Mario Dellamico, would show up as if he

19 were in charge and would give instructions to the crew about

20 what to do, and here he shows up at this deimn shipment.

21 Q What did North say in reference to your statement

22 Dellamico had met the shipment?

23 A I don't remember.

24 BY MR. KERR:

25 Q When did you have this discussion?

Uiifly^UiliBr

999

wKu^ns^

A Well, it was sometime after this thing. It must
have been, probably around August.

Q Anybody else present when you had this discussion?
A I don't remember.

Q Was the discussion face to face, over the telephone?
A Well, I remember asking him, "Who is this guy,
Dellamico, what is his relationship, how is it reasonable?"
And I don't remember exactly what he gave me, but he said,
"Don't worry about it", or something, so I didn't.

Now, I don't remember — again, it is so long ago,
my memory isn't that great, I don't know whether I read this
and then took a copy to Oliver North, or I asked Barbara
Studley to send it, or whether I gave it to Rob Bolin
or I just don't remember. I just remember we sent a copy of
this to North to keep him informed.
BY MR. BALLEN:

Do you have the shipping manifests?
It's in that pile.
Could you show us which it is?
Here we go, master's receipt. Here is the master's

Q
■ A

Q
A
receipt.

MR. BALLEN: All I am interested in is what you believ^

to be the shipping manifest. I haven't seen anything that

strikes my eye as being that. If you see something, that is
terjf^c.

IMI^SRHM

1000

drg-3

yNOBBSfBET

1
2

MR. KERR: We can come back to that.
BY MR. KERR:

Q Do you have any place any other documents on
this shipment?

A Nn.

Q You don't have any more here with you today, in
Colorado, the Philippines or GMTO, anyplace else?

A No.

Q With regard to this shipment, and when you talked
with Colonel North, do you recall having a conversation with
Colonel North, I take it, sometime in the summer about
Dellamico in particular, is that right?

A Yes.

Q Do you recall having more than one conversation with
Colonel North about the shipment and about Dellamico meeting
the shipment?

A Yes.

Q Tell me the occasions when you recall having dis-
cussed it with him?

A I don't remember the dates of them, but I remember
we had this report, which was turned over to him, and I said
I was upset with the fact that this guy was representing

[when, in fact, he was working for Ron Martin,
which I didn't know when I first saw this. Later I did learn

that.

^infMwKlt!ftH!T

1001

^UHli

UUll ILU

Then I had a speech in Los Angeles after this, in
which --

Q Will your calendar show when that speech was?

A Let's see if I can give you the exact date of
that. That was in September, the 26th of September.

Q 1985?

A 1985.

Q What happened then?

A I was out in Los Angeles giving a speech at the
Hyatt Hotel in the airport to a conference hosted by Gary
North. While I was there, Dellamico called from Miami and
said it was important that he see me, and he flew out to
Los Angeles, and I met with him for several hours.

The main thrust of his presentation was trying to
get me to agree that in the future we would not send weapons
directly to the Contras, that we would use his super market,
his, meaning Ron Martin's super market. It was really in the
nature of a threat, and I reported this to North later,
that —

Q When is later? When did you report it to North?

A I don't know.

Q Within days?

A Within — I don't know.

Q How did you report it to him? Telephone, person-

to-person?

TOT-fficiSr

1002

imsfflBF

A No, I didn't report it by telephone. I think
by either a call or, again, I may have used Rob Bolin
to go see him and say that I had had this threat. My state-
ment to Dellamico at the time was, "Look, I am interested
in getting these arms at the best price, as many arms as
we can, for the same amount of money. If they have more
money and they want to buy good quality arms this way, that
is the way we will do it. If you can meet the prices, fine.
I would prefer not to go through the hassle of arranging for
this. If we can buy two AK-47s for the price of one, and
that. is what Adolf o Calero and Enriquez want, that is what
we' 11 do. "

Q Had you been told at this time by Calero or Mr.
Bermudez they were paying substantially more to Mr. Martin
for arms than they told you they were paying Mr. Martin
for the arms at this time?

A Only that their last order was, they paid nearly
twice as much as we were selling them for. I think they paid
about $250 for one shipment.

Q Who did they tell you the order was from?

A They did not at that time.

Q Did they at any time tell you who the order was

from?

I know that the prices Dellamico quoted to me were

higher than the prices we got here.

1003

Q I understand. I want you to focus now c any
time did Calero or anyone else tell you from whom the Contras
had purchased arms that were more expensive than the arms
they purchased through your good offices?

A Well, they said at the time we offered these at
these prices, they said that is about one-half of what we have
just been paying.

Q Paying to whom?

A They didn't say at the time. Later I learned that
that was John Secord.

Q At some point, you learned General Secord had charge
them twice as much?

A Almost twice as much.

Q For equivalent goods. The goods being
Kalashnakof f s?

A Yes. AK-47S.

Q And you learned that information when? Who told
you that, and when did it happen?

A I think Adolf o Calero mentioned it. I think it
was confirmed, however, by Oliver North in some conversa-
tions.

Q When in time?

A In the fall of '85.

Q The fall of '85?

Yes.

1004

0?1&L

1 Q And as —

2 A And in '86, the same thing was said by Calero.

3 Q How about in '86 by North?

4 A I don't remember.

5 Q Coming back to the fall of 1985, when North said

6 Secord had provided these more expensive arms, was that a

7 face-to-face meeting, you talking to North face-to-face, or

8 over the telephone?

9 A No, not over the telephone. It was either face to

10 face — I can't remember when we had that meeting with

11 Calero and Secord and myself in Olie North's office. But at

12 that point, I knew that what he had charged was higher than

13 what we had charged.

14 Q All right. Did you ask either Secord or North why

15 it was that Secord was charging more for arms than you had

16 been able to arrange?

17 A No.

18 Q You did not?

19 A I did not ask them.

20 MR. KERR: Anything else?

21 MR. BALLEN: Yes. I want to go back.

22 BY MR. BALLEN:

23 Q At that meeting with Secord in Oliver North's

24 office, you were comparing prices on surface-to-air missiles,

25 SAM-7s, is that correct?

!lieiii%»BHkT

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A Yes.

Q And your prices were cheaper, is that correct?

A That is correct.

Q And during that meeting, he stated the weapons would
be purchased from Secord because he could provide instructors
with the weapons, is that correct?

A Yes, generally, that is correct. The discussion
was there -- it was about the need for instructors and par-
ticularly in operator maintenance of these weapon systems,
and Secord had people that he could provide, and because of
that, the decision was made it was probably a better deal to
get it with the instructors.

Q How much cheaper were your prices on the surface-
to-air missiles than Secord' s?

A Not a great deal. My recollection was something
he was asking 180,000 for a set, which is one missile, I
mean one launcher and three missiles, five batteries, some-
thing like that. Our price was 165,000.

Q Your price was from Mrs. Studley from Werner.

A Yes.

Q Your price was raised with him when, during the
meeting in April, you wanted to price surface-to-air missiles?

A Yes, right. Periodically he would confirm a price,
and then later —

Q Did North —

1006

drg-9

uiwtsafliiiiET

A These were MARC lis, by the way. Some of the
missiles that had previously been procured I believe came from
|and they were MARC Is.

MR. KERR: You believe that, based on what, based
on what Secord told you?

THE WITNESS: Or Bermudez, I am not sure. My
recollection is that there were ten sets that had been
procured some place and were available.
BY MR. KERR:
Q You are aware, are you not, these missiles were
not delivered to^^^^^^^^^^lthe Contras, until April, 1985?

A It's about the time we are talking about, that is
right.

Q Does that help you place when you had the conversa-
tion with Colonel North and General Secord about these
missiles?

A Well, it was after that time, because the question
was to get some more from the same source or try our
source, because we had quoted prices for these and missiles
that were less. When we got down to the nitty-gritty of,
can we provide the trainers, and that was the deciding point.
BY MR. BALLEN:
Q North had asked you to go to your source after
seeing these other prices to price the surface-to-air

missiles?

IMNlSfitEi&T

1007

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A Yes. I had that because that was one of the most
critical Items. Originally, when we were first massaging
this, when I first discussed it with Enriquez, it did
include about ten additional sets, which would have been
over a million-and-a-half .

Q During these discussions, you were saying there was
a question, some surface-to-air missiles had already arrived
from General Secord, there was a question whether to purchase
more and which source.

Since you had provided a good price on these other
weapons from Werner, was there a question whether you could
price these?

A That is right.

Q And that was Colonel North talking to you about

that, correct?

A That is right.

BY MR. KERR:
Q That would place the conversation sometime, at the
earliest, in May, isn't that right? It had to be May or
later, because you didn't have prices —
A That is right.
BY MR. BALLEN:
Q And during the meeting at the office, did Secord^
ask If the Greek ship that was en route with your arms]
could be deferred?

illlUlliAfiSlfHilbT

1008

drg-U

[ltt{M^»»T

100

1
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A At some point that question was asked.

Q Who asked it?

A It came from Secord. The idea was to divert it
to Portugal, as I recall,
^^^^^1 And in dealing with Werner, he said, no, he should
not do that.

Q So Secord had asked you?

A I am not sure whether he asked directly or whether
he asked Olie to ask me, because I only had really one meet-
ing with him.

Q Would it have either come from Secord or Oliver
North, Secord asking through Oliver North, is that correct?

A Right. ■ It was my understanding to accommodate
Secord.

Q Oate-wise, your ship arrives ^^^^^^^^^^July 8.

A Yes.

Q And this conversation, in terms of pricing weapons,
could not have occurred before May when you got to the prices
If Secord had asked you to defer the ship bringing arms from
that would place your conversation somewhere between
May, 1985 and July 8, 1985, is that correct?

A Yes, that is right.

Q Did North ever tell you General Secord was leasing
planes for airdrops to the Contra forces, that he. North,
was leasing airplanes from General Secord for airdrop to the

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101

Contra forces?
A No.

Q Did he ever tell you General Secord was in charge of
air re-supply to the Contra forces?

A No, he did not — I knew that Secord had recommended
against purchasing some of the heliocouriers . I was buying
heliocouriers, reconditioning them and sending them down, or
had in one case donated, had a plane donated.
BY MR. KERR:
Q Let me take you back to where we were. We had
gotten to September, 1985, in Los Angeles where you had that
conversation with Dellamico.
A Right.

Q I am trying to trace your conversations with North.
Did it come to your attention sometime shortly after the
Los Angeles speech that Mr. Dellamico had approached the
^^H and had put the^^Bon notice he knew about the details
and prices, et cetera, of the shipment that you had arranged
f roro^^^^

A Yes.

Q How did that come to your attention?
A Barbara Studley called me and was very upset
because she had had a call from Werner from some place in
Europe stating that Werner had been summoned to the
Embassy in Bonn, I think, or some -- maybe it was m

IMi^er

1010

BMJI^fFlir

102

Switzerland. And at the same time his assistant in Vienna
had been summoned to the^^^^^^Kmbassy there, and he really-
got a blast from^^^^^^^H stating that this individual had
come in with a copy of the manifest --

Q This individual being Mr. Dellamico?

A He was unidentified by ^^^^^^^v^r Werner, but we
concluded, based on the description of the guy, that it was
Dellamico. And I told Barbara that she should write it up
and send or deliver a copy of that to Oliver North.

Q Did you also tell her to send a copy of it to
Director Casey?

A I don't remember doing that at that time.

Q To your knowledge, was it sent to Director Casey?

A I don't know.

Q You don't know?

A I do not know.

Q Let me show you a memorandum, dated October 30,
1985j from Mrs. Studley, which will be Exhibit 5.

(The following document was marked as Singlaub
Exhibit 5 for identification.)
COMMITTEE INSERT

1011

drg-14

1
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103
BY MR. KERR:

Q I would like you to look at that document and tell
me whether you have ever seen it before.

A Yes, I have.

Q When did you see the document?

A Sometime shortly after this.

Q Sometime in late October or early November?

A It must have been the first of November. It is
dated the 30th of October. But I did hear about it. I
think she double-talked it to me over the phone and asked me
who It could be? In the report by Fields, the spelling of
Dellamico is different. It is Dollamico rather than Dellamico
And I -- after discussing this, I concluded it must be
Dellamico, based upon what ^^^^^^Hhad told Werner.

Q With that memorandum, as you can see, at the bottom
there is a series of enclosures, including most of the docu-
mentation on the shipment itself. Is that correct?

A Yes.

Q To your knowledge, all of that material was
delivered to Colonel North, correct?

A As far as I know.

Q It was delivered by Mrs. Studley?

A That is correct.

Q Now, was the material simply delivered to Colonel
North, or was there a meeting with Colonel North about this?

1012

IMSSi^T

104

A It seems to me she called him and then attempted
to deliver it to him, but he was gone or had to leave, or
something, so she left it. It's fuzzy in my mind, but I
remember that there was — she called him in the middle of the
night, I think at the insistence of Werner, and then she
prepared this report the next morning and delivered it.

Q Were you ever present at a session or conversation
with Colonel North where this matter was discussed?

A Yes, I think that I was. But I don't remember where
that was.

Q Who else was there?

A I don't remember.

Q What was Colonel North's reaction or response to
this material?

A I don't remember.

Q Did he say what, if anything, he was going to do --
you will note the memorandum asks North to take care of it,
I believe is the word, or something close to that, Dellamico
and/or Martin.

A I don't see anywhere she says that.

Q I will pick it out for you.

A My recollection is that Werner asked her to ask
Oliver North to take care of —

Q It says with urgency to stop Ron Martin/Dellamico.
That is what the memo says. What, if anything, to your

llMfM^flAftlT

1013

IffffiBiSSRW:'

105

knowledge, did North do or say he was going to do to stop
Ron Martin/Dellamico?

A I don't know.

Q You don't know?
BY MR. BALLEN:

Q Let me just ask you somef'ing. This memo was
dated in October —

A Right.

Q — and informs that the arms had been diverted
to Ron Martin's supermarket. You knew that also from a
conversation you had had with Oellamico.

A No.

Q Let me ask you this, do you know the true name of
Werner, is it Werner Lott, L-o-t-t?

A No, it is K-1-o-t-z.

Q He has never been referred to as Vernon Gott
to you?

A That is correct.

Q You have never been to his farm in Virginia?

A No, the only places I met him was in Frankfurt,
Germany -- let's see, I met him several times. I think in
the Sheraton Carlton.

BY MR. BALLEN:

Q Do you know Lieutenant Colonel Blalock?

A I have heard the name, but I can't place it.

IIN6l4SfiiEiftgT

1014

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1 Blalock?

2 Q Blalock.

3 A It rings a bell, but I can't put him in the right

4 compartment. Is it related to this?

5 Q Do you know of

6 A Yes.

7 Q Are you aware of the fact tha

8 went to the Department of Justice to seek legal opinion on

9 this shipment?

10 A I don't know that from any first-hand statement. I

11 have heard that.

12 Q From whom?

13 A Probably Barbara Studley, but I don't remember.

14 BY MR. KERR:

15 Q With regard to the matters in this memorandum,

16 you don't have a clear understanding of how Colonel North

17 responded to the memorandum, is that what you are telling

18 i"e?

19 A Yes. My concern was to get him informed immediately

20 Q I understand the concern, I understand your commit

21 ment to the Contras. What I don't understand is lack of

22 response. Ms. Studley says Ron Martin and

23 are attempting to force the Contras to buy from them. That

24 is what the memo says.

25 A That was based upon my experience with Dellamico

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in Los Angeles in September.

Q Given your sense of commitment to the Contras, if
they were being shaken down by Ron Martin and
I would figure you would find out if that was true and do
something about it. Did you?

A Since they diun't have any money, it was a moot
question.

Q It was your understanding at this point they didn't
have any money?

A That is correct.

Q They sti.l ..ad the $100,000 or . in the Swiss
account at that time?

A That is right. That doesn't buy very much.
Q You knew weapon shipments were coming in to them
at that time or not? Did you know there were still weapon
shipments coming in to them?

A No, I did not know that. It was my understanding
their last weapons shipment was the one that we provided in
July of 1985.

MR. BALLEN: Until when?

THE WITNESS: Well, until after the $100 million
was passed. As far as I know, that was the last weapon
shipment they had.

BY MR. KERR:
Q You are losing me. We basically narrowed down the

IWiiMI&T

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conversation with North on buying missiles to sometime in
May, June, very early July period of time. At that time, you
had already consumed what you believed to be the last dollars
of the Contras, is that correct?

A That is correct.

Q What were you planning to pay for rather expensive
SA-7 missiles which you were asking to be priced?

A Well, the assumption was the FDN efforts that are
ongoing and my efforts that were ongoing was going to produce
some funds in their account.

Q Is it you.- testimony as of Octroi 30, 1985 no
such funds had been produced?

A As of October, 1985, as far as I know, that is
correct.

BY MR. BALLEN:

Q And if Secord was -- if the decision was made in the
May and July time period that Secord was going to purchase the
SA-7s, where was he to get the money from?

A Let me say that in this period I did not know that
that was their last money that they had. It was my
understanding that in the April period they said "All we
have right now is 5.3 million, you got to do it within that
amount. "

And we said, "okay." We revised our list to fit
that. It was some time later I learned that there was no

1017

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more money coming in and the reason I was not given any
additional requests for either missiles or other weapons was
because they did not have the money. And that was borne
out by the fact Adolfo was continually asking me to take
some of that little residual $100,000 to pay some other bills.
Bi MR. KERR:
Q I am still having trouble following you.
A I think I understand your point. I assumed the
fund raising that was taking place was ongoing and that while
in April of 1985, when they said this is all we have, I
did not know that there wouldn't be more cl -ng. And so when
we talked about missiles, the assumption is that these ongoing
efforts to raise money would produce some money. I didn't
know whether my ef f orts^^^^^^^^^^^^^^^^Khad produced any
money or would produce money.

But I certainly didn't think it was turned off. But
in the last year, Adolfo said the last shipment we got was
yours.

Q Let's pursue the thought. In October, 1985,
Mrs. Studley advises^^^^^^^^^^^^^Bare involved in attempt-
ing to force the Contras to buy from them, apparently at
extravagant prices. This is October, 1985.
A Yes.

Q I would have thought that if you got that kind of
information out there, you would have asked Colonel North to

IMUSSiR^T

1018

IKKKSSiPil&T

do something about it. Isn't that right? Make them stop
forcing the Contras to buy f rom^^^^^^^^^^^| Isn't that
right?

A No. Because if they didn't have any money, they
couldn't be buying.

U We are going in a circle again. How could ±t have
been a matter of any concern at all to you and Barbara
Studley in October, 1985, if they didn't have any money?
Who cared? You must have thought they had money to buy if
they are making a plea to North to protect them.

A We assumed that they were goinr ti get more money.

Q All right. Let me take it on the basis of assump-
tions .

A Yes.

Q If that was your assumption, why didn't you pursue
it with Colonel North to see what he was doing to keep
Dellamico and Martin from forcing the poor Contras to buy
at extravagant prices?

A Well, I certainly did ask them about it, and I
asked Adolf o about it, and he said, "Don't worry, we are not
going to buy from them; when we get more money, we'll see
what you can produce."

Q You were aware at this time, were you not, and
going into early 1986, Calero was buying himself limited
quantities, arms were being shipped into --

1019

VFtMiW

111

A No, I was not aware of that.

Q You were aware, were you not, AS-7 missiles had
come in since April, 1985? When you went down to visit them,
you saw they had SA-7s, didn't you?

A Yes.

Q Who do you think paid for those and with what
resources?

A The same that --

Q If you had used the last $5 million, where was
the money to buy SA-7s?

A The money had already been obliga id for the SA-7s.

Q You thought when you saw SA-7 missiles in early
1986 these were missiles that had been procured back in the
spring of 1985?

A The SA-7s that I saw in 1985 I believed were the
ones purchased in early '85. In '86, I knew that they had
received some additional —

Q Yes.

A -- missiles.

Q Yes.

A I assumed that additional money had been raised by
the same efforts. Again, I had no idea whether my efforts
with ^^^^^^^^^^^Hhad been successful, because of
the options I gave was just deposit and don't — you don't
have to tell me anything.

1020

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1
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3
4

Q Do you know how those weapons were acquired, from
what source they bought them?

A No, except I knew they did not come from Werner.

Q And you knew that how? Because Werner told you,
Mrs. Studley told you?

A Yes. Because -- and Adolfo Calero also said.

Q Did he tell you where he got these weapons?

A No, he didn ' t .

Q You knew they were of Chinese manufacture, didn't
you?

A No, I didn't. The first ones I understood were
from Chinese manufacturers. They were very unsatisfactory.
Some of them were also delivered tc^^^^^^^H and he had
bitched to me about that.
BY MR. BALLEN:

Q I wanted to ask you, on page two of this memorandum
it says, "W. said to tell you it is the first of five you
are expecting. W. later called to say the ship had sailed."
Presumably he was referring to this shipment being the first
of five additional arms shipments to the Contras?

A I don't know. At the time I didn't know, and even
today I don't know what that refers to, but I am confident
that there are other parts of the world that are getting
shipments from Werner.

Q And are you confident of that fact?

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«l»Sfi»ET

113

A Because he told of the — told us of the large
volume of business that he was doing.

Q For whom?

A He didn't specify.

Q Did General Graham tell you it was for the Depart-
ment of Defense he was purchasing weapons?

A Yes.

BY MR. KERR:

Q Who did you hear that from?

A From Werner and General Graham. And in our dis-
cussions with Werner, he described the warehousing that he
has fl^^^l where he has large quantities that can be shipped
from there, and that was one of our options available;
rather than having to send a full ship to pick up a full ship-
load, we could pick up smaller quantities out of his ware-
houses

UWttA?<Sifinw=:T

1022

Q Did he ever discuss with you supplies he had done

for

A No.

Q Let me take it a step further, if I can --
MR. BALLEN: I have one more question.
BY MR. BALLEN:

Q You had said you didn't know whether this first of
five referred to other arms shipments he was making around
the world, and you assumed it did?

A Yes.

Q Why would it be important to bring to his attention
with reference to stopping Ron Martin and Dellamico?
Presumably Ron Martin couldn't stop him from delivering to

lHVwn^:prlw'pT

1023

115

1 others points in the world other than the Contras.

2 A Yes. So what is the point?

3 Q The question in my mind is, it says in this memo,
W. said to tell you, this is directed to Oliver North, it

5 is the first of five you are expecting. If it was the first

6 of five to other parts of the world, why would that be in

7 this memo? Presumably Ron Martin didn't have power to stop

8 shipments to other points in the world, Angola, the Middle

9 East —

10 A No, this was a complaint from Werner, and Werner

11 asked Barbara to get this information to Oliver North. That

12 sentence in there was not related to our shipment but the

13 fact that she was going to communicate with him, was an

14 additional thought, also tell him that this was the first of

15 five.

16 BY MR. KERR:

17 Q Are you aware of a meeting some place between

18 Barbara Studley and Director Casey on or about September 20?

19 A Yes.

20 Q How are you aware of that?

2'j A She told me that General Graham had arranged for

22 them to meet. Now, I had spoken to Director Casey several

23 times about this shipment and how effectively Mrs. Studley

24 had handled that.

25 Q Let's trace those. When did you first praise

(JNMSitiftET

1024

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116

Mrs. Studley to Director Casey about this shipment? When
did it first happen?

A I don't have any record of times I met with Casey.
I met several times.

Q This occurred sometime after delivery was made?

A Yes.

' Q It would have occurred in 1985 then?

S A Yes.

Q ^

^ Q Later summer, fall, 1985?

10 A That is right.

11 Q You don't know where it occurred?

12 A In his office.
Q Anybody else present?

14 A No.

15 Q Did you have some means of access to Director

16 Casey's office other than by way of the public registration

17 process?

18 _ A What do you mean?

19 Q What I am trying to find out, I believe there is

20 no record of you attending a meeting in Casey's office in

21 1985. Maybe I am mistaken. Do you have a recollection of

22 visiting with him in his office in 1985?

23 A Yes.

24 Q On more than one occasion?

25 A I have to say I am not sure. He has an office

ittifiiEA^aeiET

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in the Old Executive Office Building, and I did meet with
him a couple of times there earlier, and I guess I have met
with him out at Langley two or three times. I believe one
of them was in '85. It may have been early '86.

Q When you would have met with him, you would have

met him and registered, going up in his private elevator and

' being brought in covertly as it were?
A No —

Q You registered?
A I called, and they called up. I didn't go through

11 the regular thing of getting a badge.

12 Q You don't recall signing any register?
''3 A I did not sign any register.

14 Q In any event, you had two or three occasions to

15 talk with Casey about how well Mrs. Studley had done on this

16 shipment of —

17 A Yes. Also, I had occasionally talked to him in

18 social activities, OSS reunion type thing, and another

19 social event, I can't remember what the occasion was in

20 which we — he just pulled me aside, and we chatted quietly.

21 Q Do you recall any such occasion when you talked to

22 Casey and told him about Studley, particularly how well she

23 had done this shipment, when there was someone else present,

24 some other witness?

25 A No .

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118

' Q With regard to what you were telling him, you were

2 basically telling him, were you not, that you thought the

3 Central Intelligence Agency should look to Mrs. Studley and

4 Geomilitech as a potential vendor, is that correct?

5 A Yes.

6 Q You wanted him to examine whether she and Geomili-

7 tech should be a vendor to the Central Intelligence Agency,

8 is that right?

9 A Yes.

10 Q The meeting in September, '85, was set up by

11 Graham, is that correct?

12 A Yes.

13 Q Why was it set up by Graham as opposed to yourself?

14 A I wasn't here.

15 Q She went to General Graham and asked Graheun to set

16 up the meeting, Mrs. Studley did?

17 A Yes, I assume that is the way it worked.

18 Q Graham contacted Casey to have this meeting?

19 A Yes, I assume.

20 Q You did not attend the meeting?

21 A No.

22 Q Because you were out of the country, or what?

23 A I could look up and find out where I was, but I

24 was not here.

25 Q Did you know Casey's special assistant at that time

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A ^^^Hwas introduced to me basically about the time
he retired. And he said.^His the guy that you can use to
make contact and so forth, and he should be useful to you
because he ""^'HHHI^^I^ ^
him on that.

Q You placed that in time, when, spring of '86?

A Yes. I could be precise, because it was ]ust exactly
the time he retired. ^^^^^^^^^_

All regard to^HHj^Hdo

what role he played in setting up this meeting for Mrs.
Studley?

A I don't know if he did.

Q Do you know who attended on behalf of Geomilitech

besides Mrs. Studley?

A I don't know.

Q You don't know if General Graham was present?

A I don't know, but I have assumed in my own mind,
since he set it up, he took her out there, but he --

Q The purpose of the meeting, as you understood it,
was to make a presentation to Director Casey The Central
intelligence Agency would consider whether or not Geomilitech
would be a vendor, is that right?

A That is right.

Q one of the other things accomplished at that meeting

1028

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120

1 is- presentation of this memorandum and attachments to

2 Director Casey, isn't that right?

3 A I did not know that.

4 Q You don't know that. Did you ever have occasion to

5 discuss this matter that is set forth in this October 30

6 memo, Exhibit 5, with Director Casey?

7 A No, I don't think I ever did.

8 Q Did you ever discuss Ron Martin or Dellamico with

9 Director Casey?
10 A No.

U Q Do you recall discussing with Casey or anybody else

12 from the Central Intelligence Agency in late 1986 the

13 desirability from your perspective of —

14 A Late '86?

15 Q Yes. — desirability of purchasing the arms in the
15 warehouse?

17 A No. Because I was out of the country.
fg Q You don't recall ever suggesting to anyone at the
19 CIA, the Agency, out of the hundred million dollars that had
2Q been appropriated by Congress, should purchase the arms in the
warehouse?

A No, I do not recall any such conversation.
Q In terms of what came out of that meeting, do you
recall being told by anybody that the CIA would pursue the
possibility of using GMT as a vendor?

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121

A Yes.

Q How were you told that?

A I guess Barbara Studley told me she had met, and
they had asked for her to submit a list of prices that she,
through Werner, could obtain and that she was convinced that
those prices were competitive. They were less than what they
were buying at that time.

Q Out of curiosity, it was your understanding Mrs.
Studley intended to charge something for her efforts to the
CIA, isn't that right?

A That is right.

Q If that were the case, why would they deal with
Studley at all, why wouldn't they deal with Latt, as I know
him, or Klotz , as you would know him? Why put a middleman
in there at all?

A I don't know if there is some aspect of the law
that there has to be an American company involved.

-Q No, sir, there is not. There is no "Buy-American"
program for covert arms.

A I can't answer that.

Q Do you recall any discussion with Mr. Casey about
using that profit margin, the GMT profit margin, as a way of
generating monies for the Contrast
A No, I don't
Q You never suggested that to him?

:::::::"' unclassifieo

jggested that to him?

1030

pimswr

122

A No.

Q Do you recall suggesting Director Caseyj

A No. You have to understand that Casey and I die
not discuss the Contra situation.

Q I include Contras, Angola, any place else .Mr. Casey
wanted to fight a war. Did you discuss with him --

A No.

Q You don't recall this chart prepared by GMT setting
up a proposal to buy arms through^^^^^Hin a way that would
support insurgencies by the CIA?

A No. I do remember that, and I believe that that
was one of the things presented by Mrs. Studley.

Q In December?

A Yes, I think she discussed that, but I am not sure.
I wasn't present, and I am not sure, but I know she has said
that she had discussed it with Al Haig. This was a three-way
-Q Yes, sir.

Q That is right. And the ultimate beneficiary of
that was supposedly going to be insurgencies around the world,

isn't that right;
A Right.

tlNCUSSIFIfO

1031

123

Q That was a way of creating money for insurgencies
without appropriating money from Congress to do so, isn't
that correct?

A Yes.

Q That was the purpose of the program, isn't that
correct?

A Well, I think that that was one of the important
byproducts. I think that there must have been a profit
motive in there some place.

Q I have no doubt they were making a profit. One
of the other motives was to avoid having to go to Congress
to appropriate money for it.

A Yes.

Q It would be a way of doing a counterinsurgency
program without the Congress knowing about it, isn't that
correct?

A Yes.
.Q You endorsed that idea, did you not?

A No, I didn't say I endorsed it. I said I don't
believe in it.

Q You don't believe in what?

A Well, improving the military capability of the

Q You didn't believe in using the!

INCIASSIFIEO

1032

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124

A That IS right.

Q The document we have been tallying about has
previously been marked as Schweitzer Exhibit 2, and I would
like you to look at it and ask if you have seen that document.
A Yes, I have seen this before.
Q Where did you see that document before?
A I don't remember.

Q With regard to the concepts in that document,
those are concepts Mrs. Studley proposed to whom, the Central
Intelligence Agency?

A I believe she proposed it to them, and if she did,
I assume that it was when she met with Director Casey,
13 because I don't think she has had other contacts with them
'^ unless she has used General Graham or Ray Kline.
•' Q Do you know the name of -- either real name or
^6 alias name of any other Central Intelligence Agency personnel
17 with whom GMT has dealt either directly through Mrs. Studley

19 A

18 or less directly through Lieutenant General Schweitzer?

I think, was one, and Ray Xline.

20 Q With regard to current employees of the CIA, do

21 you know the identity, either alias or real identity of any

22 CIA personnel GMT has dealt with in the period 1986-1987?

23 A No, I do not.

24 Q Vou were not privy to the prolonged effort of GMT to

25 gain a vendor contact with the CIA that stretches back to at

ilM£Ui:.<:i{M

T»IT1

1033

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125

least September of 1986? You weren't aware of the meetings
and the proposals?

A Only that there were proposals submitted and that
Bob Schweitzer was helping set those up.

Q What role, if any, did you play in that program?
Did you encourage Casey to go along with it?

A Well, during that active time, I was out of the
country, so --

Q Whether you were in the country or out of it, did
you talk to Casey about —

A No.

Q You did not.

A No. I remembered in '85 and early '86 that we
were able to get those weapons at a very good price and that
it seemed to me that it would be worthwhile to try to work
that same mechanism.

Q Did it ever come to your attention the prices GMT
was offering were not, in fact, very good but, in fact, were
inflated?

A I learned only in a general sense that they had
said thatlher prices were no longer competitive.

Q That did not cause you to conclude the prices that
had been paid to Werner, Klotz or Latt were inflated in July
of 1985? You had no reason to go back and check whether or
not you had gotten good prices in July of 1985?

IIMMiftQfWHHteT

1034

|ii«»$$ilfflET

126

1 ■ A I know that we did get good prices in July, 1985 .

2 Q You got better prices -- you don't know whether you

3 got good prices, isn't that right?

4 A No, I do know that it is possible to buy an AK-4 7

5 for less than 135, but not a Polish or t;ast German or a

6 Soviet manufacture. But you car get Chinese, a copy, Chinese

7 versions at lower prices. But I am convinced that that's

8 the best price that anybody has ever bought that high quality

9 for. That's by comparing around the world, in Southeast
10 Asia and in Africa, as well as Nicaragua.

\\ Q Did anyone ever ex^'ain to you why Mr. Klotz or

12 Mr. Latt's prices were no longer competitive when of: rred to

13 the Central Intelligence Agency in 1986?

14 A No, I just assumed one of the reasons these were

15 competitive was because no profit was taken, there was no

16 markup for GMT. In fact, I am convinced GMT must have lost
gJDut close to $100,000 on that transaction because of double

18 insurance —

y^ Q That is the July transaction?

A Yes.

Q It is your understanding that was a GMT transaction,
is that right?

A GMT made no profit on it, so it really wasn't,

2- there was no -- she helped expedite that.

MR. KERR: I won't pursue it. Go ahead.

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126 -A

BY MR. KERR:
Q Do you recall in 1986 you sent a letter to Mr.
Casey proposing a financial transaction on the part of
GMT?

A May I see it? I don't immediately recall it.
Q It is a letter that would have gone out sometime
after July 28, 1986 to Director Casey. Mark it as -- this
should be six, and this should be seven.

(The Following Documents were marked as Singlaub
Exhibits 6 and 7 for identification.)
COMMITTEE INSERT

fi'

1036

127

THE WITNESS: Yes.
BY MR. KERR:

Q You did send that letter, isn't that right?

A Yes.

Q You sent that letter in late summer of 1986? It
is dated July 28.

A It must have been August.

Q About the same time you were talking to General
Schweitzer about him becoming Executive Vice President of
GMT, is that right?

A Yes.

Q I would like you to take a moment to read t .at
letter, because I do have some questions on it.

A Okay.

Q As I understand that letter, what you are proposing
to the CIA through Mr. Casey is that the CIA utilize funds
which you at that time expected to be appropriated to assist
the Contras to purchase weapons from GMT for the Contras,
isn't that right?

A Yes.

Q Essentially, what you are proposing to Mr. Casey
is that since the money cannot yet be appropriated, GMT
through Mr. Latt, Klotz's banking relationship would make a
loan to the CIA until such time as the CIA had access to
Congressional funds, isn't that right?

ftrBtASuJiiBi'.

1037

128

Uh-huh.

Please answer yes.

Right, yes.

Now, this message was what, hand-carried to Casey

Q
by you?

A I do" ' t remember hand carrying this. It's possible
that It was taken by Ray Kline oi

Q Mr. ^line and ^^^^^^^^|were acting as consultants
so to speak, to GMT?

A Yes.

Q Did you ever talk to Mr. Casey about the contents of
this letter?

A No. Only stating that GMT had a good source and a
good mechanism, including the bankers and shippers, that could
be useful at what appeared to be lower prices than he had been
paying.

Q Bear with me now. In terms of this period of time,
August forward, 1986, did you at any time discuss with Mr.
Casey the content of this letter, proposal, purchases of GMT,
anything of that kind?

A No, because shortly after I had signed this, as I
recall, I left the country and was gone almost continuously
the rest of the year. I left, I think, on the 30th of August
or thereabouts, 30th or 31st, and came back only once for an
IRS hearing in October.

ill

1038

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uneasflw

129

Q You were m the country long enough to persuade
General Schweitzer to become Executive Vice President of GiMT,
is that correct? That is yes?

A That was before I left.

Q Yes.

A I went with him to England in August.

Q And he signs on as Executive Vice President of GMT
the 1st of September, isn't that correct?

A That is right.

Q One of his first tasks was to deliver documents to
Colonel North. Were you aware of that?

A No.

Q Did you have a discussion with General Schweitzer
in his guise now as Executive Vice President of GMT about
this letter that you were sending or had sent to Casey?

A No, I don't believe, I can't remember discussing
this with him.

Q Do you recall ever being told anything about the
prices being offered in this letter to the Central Intelligence
Agency?

A Only that the list was considered not competitive.

Q And you heard that from whom?

A I think from General Schweitzer, but it may have
been when Schweitzer and Ray %line came through ^^^^^■^'^
November of last year that they mentioned that. He saiS it is

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one of the projects he was working on, this list.

Q In that connection, you learned the identity of who
in the Central Intelligence Agency GMT was dealing with in
this letter or subsequent letters?

A No.

Q At the same period of time this letter was written,
you were aware, were you not, Mrs. Studley was investigating
a cargo aboard the Pia Vesta?

A Yes. This is the one in Panama?

Q Yes.

A Right.

Q You knew that how, she told you?

A I don't remember whether she learned of it first or
I did. I remember I discussed this with Nestor Sanchez, and
I think I discussed it with Colonel North.

Q Do you recall whether Colonel North made a request
of Mrs. Studley to investigate the Pia Vesta?

A No, I didn't.

Q You did not know she traveled to Switzerland to talk
wLth people who had an ownership in the cargo of the Pia

Vesta?

A No, I did know she made a trip there, and while there
she went to the office of the man named Patrice and asked
some questions about it.

Q YOU knew why she did that, don't you, she had been

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1 requested to do that by Colonel North?

2 A I don't know first-hand he had asked her to do that.

3 Q Second-hand? Did somebody tell you that?

4 A I don't remember exactly

5 Q I will go on to another question.
9 A I just don't recall what prompted her. I do

7 remember she was going to be there, and I think she asked me

8 if I thought it was all right for her to go to this office.

9 There was a man by the name of Colonel Cummings that had
JO provided I think some of the information about this office in

11 Geneva.

12 Q Sam Cuiranings?
A No, this was Dan, not Sam.
Q Dan Cummings, who was the employee —
A Elton Cummings.
Q That Cummings is in the employ of Patrice, is he

not?

A I don't believe so. I think he worked for a man in
Florida —

MR. BALLEN: David Duncan.
THE WITNESS: Yes.
BY MR. KERR:
Q What was your understanding of David Duncan's
relationship to Patrice?

A They had some relationship. David Duncan, I think.

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on- the telephone gave to Mrs. Studley Patrice's address.

Q What was your understanding of David Duncan's
relationship to Ron Martin?

A I don't know of any relationship.

Q Why was Mrs. Studley pursuing this matter, if you
know?

A Well, in my discussion of this with Oliver North
and Mr. Sanchez, when we first heard about it, it appeared
that this was a shipment that was not delivered, and if it
could be released, it would make a good contribution to the
Nicaraguan Freedom Fighter cause.

Q You knew, among other things, there were 32 armored
vehicles on that ship, isn't that right?

A No, I didn't know they were armored vehicles, I
thought they were trucks.

Q You were not interested in trucks, were you?

A No.

Q You were interested in the Kalashnakof f s and RBGs.

A That is right. I mentioned this to Nestor Sanchez,
and I said, "Is there any chance we can have^^^^^^Hre lease
that?" And he said, "Well, it's a good idea." And he said,
"I will pursue that also."

I explained that conversation to Barbara. Since
she was going to Switzerland, she decided she would stop in
and find out as much as she could about it.

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Q So she was trying to find out whether or not
Patrice was willing to sell these goods, and if so, at what
price, IS that correct?
A Right.

Q Did she obtain that information?

A If she did, I don't remember what the results were.
Q How did you, on behalf of the Contras, propose to
pay for these goods, assuming a deal was struck?

A I was more interested in having them donated. To
me, it looked like they had been confiscated

Q They had confiscated them from Mr. Duncan and/or
Patrice and then donated them to the Contras?
A Yes.

I see. But what happened to the goods, do you know?

I don't know.

You know the goods were released, do you not?

No, I don't. That took place after I left the

A
country.

Q Why was Ms. Studley involved in this matter if
all you were trying to do was trying to persuade
seize the goods and pass them to the Contras?

A I think it was just finding out more about the
real ownership and who had ordered it.

Q She was on an intelligence mission, as you

perceived it?

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Yes.

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Q She was not actually trying to contract to purchase
the goods?

A No, as far as I know, she was not. It was strictly
to find out as much as possible about the shipment.

Q During this period of time, the summer of '86,
you were aware, were you not. Colonel North was endeavoring
to sell, if you will, the assets of what he liked to call
Project Democracy? You were aware of that, weren't you?

A No.

Q You weren't aware he was trying to sell the air-
craft that was trying to dispose of various assets that had
been acquired?

A No.

Q You had no knowledge of that?

A I had no knowledge of that.

Q You were not asked by him to intervene with Mr.
Casey to try to persuade the Central Intelligence Agency to
buy those assets, is that right?

A No, I was not.
BY MR. BALLEN:

Q During that period, in the fall of 1986, did North
give you a list of 20 to 25 arms items he wished you to price?

A When was this?

The fall of 1986,

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1 A The fall of "86?

2 Q Correct, sir.

3 A No, definitely not.

4 Q You never gave to Barbara Studley a list of items

5 he had asked you to price?

6 A Well, yes, that's quite possible.

7 Q When would that be?

8 A That probably was the summer. Again —
g MR. KERR: Summer of '86?

JO THE WITNESS: Yes.

]f MR. KERR: Can you elaborate on that? What would

j2 he have given? For example, are the goods on that list the
j3 items he asked you to price in the summer of 1986?
j4 THE WITNESS: Yes, this — I don't remember this

<e specific list. And you said how many, 20 some?
.g MR. BALLEN: Twenty some items.

BY MR. BALLEN:
Q Did you have a meeting with Barbara Studley and
Colonel North at the Sheraton Hotel where you gave them the
list and prices?

A Yes, I think I did. It was in my room.

Q What occurred? First of all, what was the list he

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__ had given to you?

A What do you mean, what was the list?
MR. KERR: What did it consist of?

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1 MR. BALLEN: What was on the list?

2 MR. KERR: Weapons, oranges, what?

3 THE WITNESS: Something like that.

4 BY MR. BALLEN:

5 Q Why had he given you the list at that time? What

6 did he say to you when he gave it to you?

7 A I don't remember the conversation.

8 Q But he asked you to price the list.

9 A I think that is right.

^Q Q Through Werner, that is how you were going to price
11 It?

A Yes.

Q When you met at the Sheraton, you gave him a list
ofiprices you had priced?
A Yes.

Q Were these AK-47s and other kinds of Soviet-type
weapons you were asked to price?

A Yes. My recollection is it was a list similar to

this one —

Q And this one, you are referring to Committee Exhibit
7, on the second page, your letter to Casey of the Central
Intelligence Agency?

A Yes.

Q Do you recall when it was you gave the list in your

room at the Sheraton?

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137

A No.

MR. KERR: Do you recall the season? Summer, fall,
winter, spring?

THE WITNESS: It must have been the summer.

5 BY MR. BALLEN:

6 Q When you gave him the list, what did you say to

7 him at that time?

8 A I don't remember.

9 Q What did he say to you?

10 A I don't remember.

11 Q Do you remember what the purpose was that he gave

12 you the list for?

13 A Well, it was a list of weapons.

14 Q That he had asked you to price?

15 A Yes.

t6 Q Vou had a meeting in the Sheraton Hotel, and you

17 don't remember what he said when you gave him the list with

18 the prices?

19 A No, I don't. I think it's just that I don't

20 recollect the conversation, but I do remember the incident.

21 That was one of the purposes of the meeting. And he had asked

22 for the prices and —

23 Q Were these more arms for the Contras he was trying

24 to price?

25 A Yes. That's my understanding of what it was.

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Q Who was going to purchase these arms?

MR. KELLEY: Can I talk to him for a second?
MR. BALLEN: Yes.
(Conferring. )
BY MR. BALLEN:
Q My question was Colonel North told you these ar'^s
were for the Contras?

A I just have to say that I remember Ollie giving
me a list saying, "How about getting the best price on this?
What is the best price?" I was only involved on the Contra
action with Ollie. I assume that they were working toward
the day when the $100 million would be approved, and they
would be able to do it, and they were trying to figure out
how they should go, hopefully how much better it would be to
buy from GMT than from Ron Martin.

Q Didn't Oliver North say, when you handed him the
list, that the prices you had gotten on the list showed who
he was dealing with was crooked?

A He may have, I don't remember that.
Q He may have?
A Yes.

Wouldn't that be something that stood out in your

Q
mind?

MR. KELLEY: Who is he?
MR. BALLEN: Colonel North.

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MR. KiXLEY: Who was crooked?

MR. BALLEN : Would you please read back the question?
(Whereupon, the reporter read the question.)
BY MR. BALLEN:
Q I am quoting a statement, he gets the list, General,
and he says that the person that he was dealing with --
A He, Oliver North.

Q He being Oliver North. -- was crooked, or words to
that effect?

A I, quite frankly, don't remember that specific
statement.

Q Was he upset when he got the list? Was he angry?
A I don't remember specific anger. Surprise maybe.
Q Did this meeting occur in November of 1986?
A No.

MR. KERR: You do not recall it occurring after
Colonel North had lost his position with the NSC?

THE WITNESS: No, I am sure it did not, because I was
not here. I was in

BY MR. KERR:
Q You did come back from time to time, did you not?
A No.

Q You did not?

A I came back just once. I came back and left in
August, 1986, came back for five or six days in October for

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the IRS hearing. And I returned in October to,

and I did not come back until the invitation from the FBI

in February.

BY MR. BALLEN:

Q Let me ask you something else. You testified earlier
that you had no idea whether or not your solir i.tation to

Iwas successful.

A Right. My assumption was that it was not successful,
because I had heard nothing otherwise, except that the Tower
Commission report indicates that it was successful.

Q But your understanding, until you read the Tower
Commission report, you had assumed it was not successful?

A That is right.

Q You had no conversation with anyone regarding whether
it was successful or not, Oliver North, William Casey,
Elliott Abrams or anyone else?

A No, that is correct.

Q Now, in May of 1986, you went again toj
is that not correct?

A That is right.

Q And you had conversations with Oliver North and
Elliott Abrams before you went, telling them that you were
going to solicit funds?

A That is right, I did.

Q And they told you that that was all right, to go

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ahead and solicit funds?

A That IS correct.

Q From the|

A Right.

Q And when you went over there --

A Actually, I don't think I spok; directly to Oliver
North at that time. I did speak to Elliott Abrams, because
he at that point was the point of contact I had been using for
quite some time.

Q And did you ask Mr. Abrams, in order to be prepared
before you made additional solicitation^^^^^^^^H whether
your prior solicitatior^^^^^^^^Hhad been successful or not?

A No, I did not ask that question. I assu^ned they had
not been, so I was going to solicit again. I was going to
ask again. This time, however, I wanted to know in advance
who would be the one to give the signal if they asked for it.

Q What did Elliott Abrams tell you?

A He said that he would.

Q Subsequently, when you arrived there, he called you
and said not to do it?

A That is correct.

Q But at no time prior to leaving did you have any
discussion with him or Oliver North or anyone else in the
administration whetl.er or not your prior trip had been
successful ?

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A No, I did not.

Q And if It came up, how did you expect -- assuming
that it had been successful, you would be ^^'^^'^^hH^^HH^B
for additional funds, wouldn't that be true?
A That IS correct.

Q And it was not important, in your mind, to know
whether or not that was successful in terms of asking them
for the funds, something to the effect, thank you for con-
tributing before, but now I am going to haveto ask you again
because the Contras haven't met their needs?

A No. I assumed that when I brought the subject up,
if they had contributed something, someone would have told
me. All this time I was under the assumption that it had
not been successful, my effort had not been successful. So
I was making a second attempt. When I went and told of my
previous — told Elliott of my previous efforts and that I was
prepared to make that approach again but that I was concerned
about who could I call upon to give a signal if that was
requested, and I told him about the previous effort, and he
said, well, I will, I will do that.

Q Did Oliver North, sir, ask you to go to Costa Rica
to meet with Pastora?
A No.
Q Did William Casey ask you to go?

A No.

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143

Q You went on your own initiative?

A Yes.

MR. KERR: You did not meet with anyone in the State
Department, Elliott Abrams or any of his assistants, prior to
your trip on or about March 27? You left and got down there
about the 23rd, isn't that right? You went with Mrs. Studley?

A I can give you exactly when. The 24th of March, we
entered San Jose.

BY MR. KERR:

Q Before you departed, leaving the 23rd, or whenever,
you actually met with Elliott Abrams and his staff, did you
not?

A Yes.

Q . One of the things you discussed was Eden Pastora,
correct?

A Yes.

Q One of the things you discussed about Eden Pastora
was trying to get Pastora to come under the umbrella of UNO,
isn't that right?

A Yes.

Q What direction, if any, did you get from Elliott
Abrams or his staff members at that meeting on the role you
were to play in encouraging Pastora to come under the UNO
umbrella?

A My recollection is that they said, they agreed with

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my basic premise that he was a resource that we ought to have
working for us rather than against us. I told them that it
was my impression, as a result of many meetings with him here,
that he was becoming embittered --

Q He, being Pastora?

A He being P'<5tora.

Q because or the way he had been handled. And when I

w 1 1 t^^^^^^^^^^^^^^^^^H^^^^m^^^^^^^^^i

he confirmed the idea and the view that he had, Eden Pastora
was the only leader of all the resistance that had any name
recognition throughout all of Nicaragua.

Q This discussion would have taken place in March of
1986?

A Yes.

Q While he was still in the employ of the CIA or
when he had departed from the employ of the CIA?

A I think it was after he had departed.

Q Was it your understanding he was to convey to you
the directive or impression of Director Casey?

A No.

Q He was speaking on his own behalf?

A Speaking on his own based upon his personal

knowledge ^^^^^^^^^^^^^^^^^^^^^^^P

Q As of the time you got on the airplane on March 23 or
2 4 to go to Costa Rica, had anybody from anywhere told you the

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Central Intelligence Agency had embarked upon a campaign,
beginning in early January, to strip away Pastora's lieutenants
and also launch what they ^^^^^^^^^H calls a denigration
campaign against Pastora?

A No, no one in the U.S. Government told me that that
was an officia'' policy.

Q Did that ever come to your attention?

A Well --

Q Surely Pastora --

A Pastora certainly was complaining about the CIA.
My conversations with Elliott Abrams led to my belief that,
yes, Pastora is an asset that we ought to be using, but he has
been difficult and has been creating more problems and is more
of a burden than a benefit at this point.

And in trying to find out what those problems were,
what burdens he was carrying, it was reported that he was
in Costa Rica creating problems.

Q One last question, 3ust so I can lay the ground
work: You did not discuss with Casey or anyone you thought
would talk to Casey the fact that you were going to go to
Costa Rica and try to get Pastora to sign up with UNO, is
that right?

A No, I did not discuss it with Casey or anyone in
Casey's office, but I assumed that Elliott Abrams, who met
regularly with Casey and with Oliver North, would mention this,

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and that if this was not a good idea, somebody would let me
know. That was the agreement I had with them.
Q And —

MR. BALLEN: Agreement with whom? You said agree-
ment with them. With whoji^

THE WITNESS: First it was with Oliver North. I
said I will report to you what I am doing to help Adolfo
Calero. If you hear that I am doing something that is dumb,
let me know, because I didn't want to do anything that was
contrary to what I believed to be the administration's policy.

I knew that he couldn't give me orders, directives,
and didn't want to do that. I just said, "Let me know if I
am doing something dumb'. And I told Elliott the same thing,
I said, "I am trying to be helpful. I don't want to -- I am
not creating foreign policy, I am not trying to be a second
CIA. All I want to do is to facilitate this," and I have become
good friends, personal friends of Eden Pastora as a result of
many meetings and some very frank discussions with him that
had gone back a couple years.

MR. BALLEN: So you had told North if there was
anything you could be doing with Pastora ~

A Not specifically with Pastora. What I was doing
with the Contras. That was the agreement, silence is approval.
BY MR. KERR:
Q You think you had a similar understanding with

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Elliott Abrams, is that correct?

A Yes. Except I could be more frank with him.

Q Let me clean up quickly. As of the time you got
on the airplane to Costa Rica in March, 1986, you had told
Colonel North of the fact that you had intended to speak with
Pastnra and bring him under UNO?

A No.

Q After you arrived in Costa Rica and you began
negotiating with Pastora for the agreement that was ultimately
signed, did you consult with anyone in the embassy about what
you were doing while you were doing it?

A I — yes. I went to the embassy, met with Lew T«inbs,
and he brought in his defense, the attache, the guy who has a
euphemistic title there --

Q What was the name?

A Lieutenant Colonel — something like Lent, I think
it was.

Q Did you tell him you were negotiating with Pastora?

A Yes. I was meeting with Pastora. My objective was
to try to get him to join up. I wanted to know what
specifically was he doing that was creating problems for the
U.S.

Q And did they tell you?

A Yes.

Q Did they tell you they thought it was a good idea

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to go ahead with these negotiations?

A They did not tell me not to and did not express any
objections, I guess, is the best way I can answer that.
Because I don't remember specifically anyone at the time before
of the case saying it was a good idea, but they answered my
questions about what were the problems, and I said, "Well,
I believe he is an asset we ought to have on our side. If
we continue to treat him the way we are, he can become a
liability." I told him what I was going to do.

Q Was there anybody at these meetings before the
document was signed that you either knew or suspected to be
from the Central Intelligence Agency?

A Yes. /

/
Q Who was that?

A think it was^^^^^^^^^Hpr his representative
was there.

Q Either him or his deputy?

A Yes.

Q Did they encourage or discourage you?

A Neither .

Q You don't recall them telling you not to do it, it
is a bad idea?

A Definitely they did not say that.

MR. BALLEN: Let me ask you one or two questions on

this .

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BY MR. BALLEN;

Q After you concluded the agreement on March 26 with
Eden Pastora, did you contact anyone in the administration in
terms of having Adolfo Calero deliver goods to Pastora in
Nicaragua?

A Well, I turned the agreement over to Lewis Tambs,
the U.S. Ambassador to Costa Rica.

Q Did you speak to Calero about him delivering
supplies to Pastora?

A Yes. "~^

Q How did Pastora respond to that?

A He said we can do that, there is no problem.

Q And did you speak to anyone in the administration
about Calero supplying goods to Pastora in Nicaragua?

A One of the CIA of ficers ^^^^^^^^H accidentally
ran into me during my activities there. He made reference to
this meeting, and I said, told him I had gotten an agreement
from Calero and Enriquez Bermudez to release a small quantity
of AK-47 ammunition that was going to be required, a few
hundred rounds, a few thousand rounds. And, again, he said
something, no problem.

Q Do you recall who that official was?

A No.

MR. KERR: Did it come to your attention the
materials were not delivered at the order of the Central

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1 Intelligence Agency?

2 THE WITNESS: I was never told that it was the Centra

3 Xtttelligence Agency that gave the order, but I assumed that

4 because only the CIA could have had that level of control over

5 the FDN who had made a promise to me.

6 BY MR. BALLEN:

7 ^ Q Did Calero ever tell you he had gotten an order from

8 the CIA not to deliver weapons?

9 A No, he did not tell me that.

)Q MR. KELLEY: One more question.

>rHE WITNESS: Do I come back here?

12 MR. KERR: If I can persuade you to come back, we

13 probably will have you come back.
MR. KELLEY: Just be in touch.
BY MR. KERR:

Q In April of 1984, during that period of time, the
spring of 1984, did you learn or come to know that Colonel
North and Mr. McFarlane had concluded that you were to be
the coordinator, the spokesperson for a private effort to aid
the Contras?

A No, nobody ever informed me of that, talked to me
about that. I saw it printed in some publications.

Q AP ran a story to that elfect. That is not true, to
the best of your knowledge?

A Not true, to the best of my knowledge.

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Q In October, 1984, were you involved in the effort to
perftuade^^^^^Hto give military assistance to the Contras,
19184, three times, three requests?

MR. KELLEY : Is this where we started this morning?
BY MR. KERR:
Q In October, 1984, were you involved in the effort
to persuade^^^^^Hto give aid to the Contras?
A No.
Q You don't recall being visited by Colonel North,

saying he was talking to|

to deliver aid to the Contras
A No, he didn't tell me that, but Adolfo Calero told

me that he had been approached byj

and I asked him
not to deal with them, that it would produce problems.

Q Does that refresh your recollection you had gone to
and asked^^^^^Hto provide aid to the
Contras?

A Was I inl

Q I don't know that. If you don't know —

MR. KELLEY: You can learn the answer by looking at
your calendar.

MR. KERR: We asked for the calendar in the subpoena,
If you will send us a copy of it, that will be appreciated.
THE WITNESS: I have a copy here.

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MR. KERR: As much as I would like to keep you here, I
gvMSS we had better let you go to your airport.
BY MR. BALLEN:
Q This is your calendar or a chronology?
A That is a combination of taking things off my
calendar and my passports.

MR. KERR: I appreciate that.
MR. BALLEN: Thank you very much.

(Whereupon, at 2:10 p.m., the committee was adjourned
subject to the call of the chair.)

top^^cSe'

1062

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under oravisicno of E 0 V3bB
by K Jonnsoti^ National Secunty Council

1063

Partially Oeclassified/Releaseil on_T/i£?C'0
undei pruvKions o( E 0 12356
by K Jolinson. Nattcnal Secunly Council

s s s s §

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JXS-2

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N 16513

Jack ^as i;«9d that I s«nd yoi^^cop^of tht 'List' and t^.e l*'.-.^
b«irig delivered tc Bill Casty byfl^H|HH|^t noon trdiy lAu^.

Pleisc follow up \^ith hiiT, or jr. t>.t ••.*nt tJ-at you :arnc.t dc sc
pl«as« ?<-e t:-at ti-« ri^^t p*r»on ;n tf.t NSC ur i»:s'.4.-dj w^ae we a:-
gropes ;r=. ~

Sw:ss tap.k*r sti-idirg by, lean can bt arrarjvd vi»h »tsolutely r
namet, •ec. Fund* availablt irrvdiattly. Shij.T^r.t can :»av« doc<
within two w«*kt and arrivt at deatir.ition in fiv« tc s:x wscks frotr

rcw iSc.ct ?th) .

Sl^^-

Partially Declassified/Released on. V %^ PC
under provisions o( E 0 12356
by K Johnson. National Security Council

Bf.i m

IXHIIIT

X<CS-5

1065

UNCLASSIFIED

0^:35

PERSONAL AND CONFIDENTIAL

Mr. William Casey

Director, Central Intelligence Agency

Langley. Virginia

Dear Bill.

The enclosed list of hardware is available for immediate <ie'*very at the prices
indicated. The list was developed in conjunction with a member of the NSC who is
knowledgeable of the urgent needs of the United Nicaraguan Opposj^ion with wh,cn
the US has a continuing interest. The items can be at dockside ready or shipment
within two weeks from the date of a Letter of Credit or the deposit of actual funds.

Due to the fact the funds from Congress will not be available until after September, our
bank ?nsJ?«nand will accept a Letter of Credit from your bank and issue a loan <o
s^x to ^elTe mS. or as needed. Our bank w>ll fund immediate^ for the purchase of
me i^S3 JfJms thus providing the equipment that is so desperately needed now wh, e
allowing for payment at a later date.
Our banker is prepared to fly to Washington and take care of the Letter of Credit directly

to know your identity, only your banker.

transaSon. nor of th« individuals or actual organ.rations involved.

Pleas, tot m. know as soon as possible your d.s.res for our future actions on this

matter.

Yours tnjiy.

<-— 3ohh K. Singiaub

^-wafor General. U.S. Army (RET)

Consultant

1 Inci: a/s

,.<*rf!!^^?r?nV«.r7a(»-7-M« T-- 90427.GMT W«n OC

1066

GeoMiiiTec.i Corsui>. .s Ccio
1919 Pennsylvania Av« NW Suitt
WunmgtonOC 20006

Quotad 2IJuiyi966

mmww

-'-i Ja:-;-.

ITgM

UNITPfllce

SA.7

S0s«U(l«3)

lS9.600p«fS«f

I2.7mfn MachintGin
i2.7mfflAfTwne

3 Milion Round*

9.390tacft
2.940 porM

u.Strm MaefMwOun
t4.5^HT) Anvno

20 TwinVtfiion
1 Miflien Rounds

34.000«ach
3.S70 ptr M

RPKRifla

7 62X39(nmAinmo

300

15 MiHien Rounds

1.9Maac»
l2«DorM

60f?«n Moftar XomnandQ*
60(TwnSh«lli

200
600.000

ISOOtoeft
MMcn

«.

SamnSMIS

SO
130.000

7.190 •act)
lOSaaen

flPO.7 luitxMr
P0-7vm RocMU

200

10.000

i.aiSaact)
i94aacn

271

a. C4 Piasiie he*
9. AKMS RMas

10.000

iSSaaeft

PRICI
OaMvory

• dodaUt.

aNppsr «■ datvor 10 pott you dssignat ■ nemsl eenvoUM rata*.

* Avalatta: Souroa wN not quoM wKhou bona fids effar.

tam undaf Qonaoi oi aapawa pafl ot ovanvnad

Souios guarwMaa phea wi ba aa eonvaOBwa as «« ediar Mm on tNa isL

ONCUSSIRED

NO EUC REOUIREO.

SOURCE SUPPUES AU REOCtlREO DOCUMENTS AT NO AOOmONAL CHAROfi.

BOSTON PUBLIC LIBRARY

3 9999 06313 229 2

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